More family offices are investing cash in risk assets, with the strongest shift towards equities coming from Asia

SINGAPORE – Family offices are shifting cash into bonds, public and private equity, with almost half expecting gains of more than 10 per cent in the next 12 months.

Public equity allocations were similar across the board, at between 26 and 30 percent. Allocations to private credit and real estate funds were also at comparable levels of around 2 percent.

Bond allocation varied across the world, with desks in Asia Pacific and Latin America placing more emphasis on it compared to other regions.

According to the Family Office 2024 study conducted on September 18 by Citi Private Bank, companies from the Asia-Pacific region, i.e. entities managing the wealth of the super-rich, are leading in investing in public stocks, i.e. public companies.

Some 68 percent in the region reported an increase in their allocation to public capital, the most of any part of the world. Only 32 percent in North America did so.

Some 42% of family offices in Asia Pacific increased their fixed income allocations, while 39% increased their allocations to private equity and unlisted companies.

The asset class with the smallest changes across all regions was real estate.

Almost 40% of all family offices in Europe, the Middle East and Africa, Latin America and Asia Pacific reduced their share of cash, compared with 30% in North America.

The survey drew responses from 338 offices worldwide, with about 20 percent of respondents coming from the Asia-Pacific region. Half of the respondents had more than US$500 million (S$647 million) in assets under management (AUM).

Relations between the United States and China were the primary concern for Asia-Pacific family offices. Then came expensive markets, inflation, interest rates and the stability of the global financial system, as well as trade disputes and currency risks.

Conflicts in the Middle East and the Russia-Ukraine war continued to cause concern, although this was less the case in the Asia-Pacific region.

For the first time in 2021, inflation was no longer the world’s top concern. Instead, the outlook for interest rates was the top concern for more than half of respondents globally, followed by the US-China relationship, market revaluation and inflation.

Worldwide, concerns about the conflict in the Middle East were greater than those about the Russia-Ukraine war.

In terms of portfolio performance, family offices in the Asia-Pacific region recorded the highest percentage of negative performance, while the largest increases were recorded in Latin America.

The study found that family offices with more than $500 million in AUM were more likely to report positive portfolio performance than smaller ones. Family offices in the region were most bullish on direct private equity and private equity funds, as well as developed market equities.