Nearly 40% of all family offices in Europe, Middle East and Africa decreased their weighting in cash, compared to 30% in North America.

Following the public equities upside in 2023, family offices are shifting their portfolios from cash to risk assets with the expectation of portfolio gains in the coming year

Dubai -- Citi Private Bank’s Global Family Office Group today released the results of its 2024 Family Office Survey, offering a rare glimpse into the thinking and behaviors of some of the world’s most sophisticated investors: its family office clients. Amid ongoing market volatility and geopolitical challenges, the report outlines key challenges and areas of potential opportunities for the year ahead.

The survey, which is distributed annually to all of Citi’s global family office clients, captures the investment sentiment, portfolio positioning, family governance and best practices of family office clients in 2024. It received a record number of respondents this year, making it the most global and comprehensive survey of its kind.

“Our family office clients are increasingly becoming more global as they seek to create and preserve wealth amidst new market challenges and opportunities,” says Selim Elgen, Citi Private Bank Head Middle East and Africa. “There is an enormous amount of wealth creation happening right now in the Middle East. We have also noticed an increasing amount of liquidity generation by our clients.’’

Key findings to emerge from this year’s survey for the Middle East include:

 Allocation changes in the last year 

  • Fixed income saw the greatest weighting increases in Europe, the Middle East and Africa, where 59% raised allocations.
  • Nearly 40% of all family offices in Europe, the Middle East and Africa, Latin America and Asia Pacific decreased their weighting in cash, compared to 30% in North America.

Near-term worries impacting financial markets and the economy

  • The path ahead of interest rates was a top concern for North America family offices (65%) and for Latin America (55%).
  • Interestingly, those in Europe, the Middle East and Africa were even likelier to cite this as a worry (55%), above the Russia/Ukraine war (24%) and the Middle East conflict (27%). Given its heavily reliance on trade with both US and China, Europe could lose out if relations between the world’s two foremost economic powers became even more polarized, perhaps requiring it to align much more heavily with one side.

Asset class sentiment for the coming year

  • Family offices in Asia Pacific and Europe, the Middle East and Africa were the most positive on the outlook for global developed equities, at 48% and 46% respectively. They were also the most bullish toward direct private equity (49% and 53%) and private equity funds (48% and 43%).

 Financing needs

  • Family offices in Europe, the Middle East and Africa were likeliest to be considering seeking financing in the coming year, with just 28% ruling it out. In Europe, the Middle East and Africa, the top focus was financing private equity, real estate came top elsewhere.

Interest in M&A

  • Large family offices appear to favor North America and Europe, Middle East and Africa for M&A activity, but this likely reflects that many of the larger family offices were based in these two regions and have a bias toward investing in their home region.

Investments in artificial intelligence

  • Europe, the Middle East and Africa family offices reported the highest commitment to AI investments, with only 12% not considering a priority. Asia Pacific expressed a strong preference for AI via public equity (50%).

Highlights from the Family Office Leadership Program – geographical diversification 

  • The Middle East was discussed as offering attractive investment potential across real estate, energy and the broad reinvention of the regional economy

For the first time since 2021, inflation was not respondents’ top near-term worry related to the economy and financial markets. Rather, the outlook for interest rates was top of mind for more than half of respondents, followed by US-China relations and market overvaluation

For the year ahead, sentiment around the outlook for asset classes was more positive among respondents compared to last year’s survey findings, with the most confidence in direct private equity, private equity via funds and global developed equities. Compared to the 2023 report, positivity toward global developed investment grade fixed income decreased from 45% to 34%, which may reflect the uptick seen in risk-seeking appetite. In regard to portfolio returns, respondents were nearly unanimous (97%) in the expectation for positive returns, almost half of respondents anticipating returns above 10%.

The 2024 Global Family Office Survey Insights Report also revealed a shift in portfolio allocations. Public equities and fixed income saw their weightings rise from 22% to 28% and 16% to 18%, respectively. Private equity also dipped from 22% to 17%, which may have been accentuated by valuations taking longer to adjust upward compared to those of public equities. North America received the highest overall weighted allocations (60%) followed by Europe (16%) and Asia Pacific excluding China (12%). Allocations to China had almost halved to 5% from 8% since last year due to the country’s ongoing economic challenges and market unease. North America’s share of allocations was up from 57%, buoyed by a strong equity market.

Results show that asset value preservation was the main concern for families, followed closely by preparing the next generation to be responsible owners of their wealth. This underscores the dual priorities of family principals who seek to prepare wealth for their families and to prepare their family members to be stewards of that wealth. Furthermore, the adoption of formal governance systems is unequally distributed within family enterprises. While more than two thirds of families’ governance systems in place for the investment function, less than half report relying on formal governance for other family office affairs and the family itself.This year’s survey was initiated during Citi Private Bank’s ninth annual Family Office Leadership Program held in June 2024. The survey was subsequently released to Citi Private Bank’s global family office clients for input, with 50 questions aimed to capture the investment sentiment, portfolio positioning, family governance and best practices of family office clients. It drew responses from 338 participants who were included in this report.

Citi Private Bank’s Global Family Office Group serves single family offices, private investment companies and private holding companies, including family-owned enterprises and foundations, around the world. We offer clients comprehensive private banking and family office advisory services, institutional access to global opportunities and connections to a community of like-minded peers.

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 180 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.