Wealthy Families Opt for Bonds & Private Equity as Stock Exposure Decreases: Citigroup Survey
According to a survey conducted by Citigroup’s private bank, wealthy families have been reallocating their investments in the first half of this year. The survey, which polled 268 family offices with a collective net worth of $565 billion, revealed that more than half of the respondents increased their allocations in fixed income, while 38% boosted their private equity holdings. In contrast, 38% reduced their exposure to stocks.
The shifts in investment strategies mark the largest changes seen since Citigroup began the study in 2020. The S&P index has witnessed a 4.12% rise so far this year, while 10-year Treasury bonds closed on Monday with a yield of 4.288%.
Families have been turning to private equity investments, especially in light of a sluggish market for initial public offerings (IPOs). However, it is worth noting that these private equity investments are now more conservative compared to previous years. Hannes Hofmann, who oversees the global family office group at Citi Private Bank, stated that family offices are focused on investing in high-quality companies operating in traditional industries, particularly those with positive cash flows.
The survey also shed light on the concerns weighing heavily on respondents’ minds. The top worries included inflation, rising interest rates, and uncertainties arising from tensions between the United States and China. In light of these concerns, Ida Liu, the global head of Citi’s Private Bank, highlighted that ultra-high net worth investors and their families are diversifying their portfolios and considering direct and sustainable investments.
The family offices surveyed maintained an average portfolio allocation of 22% in both public and private equities, 16% in fixed income, and 12% in cash. It is worth mentioning that two-thirds of the respondents were based outside the United States.
As the investment landscape undergoes these changes, it is important to note the evolving strategies adopted by wealthy families. The survey findings indicate a shift towards bonds and private equity, with a cautious approach to investing in light of global uncertainties. Only time will tell whether these trends will continue or if further adjustments will be made to investment portfolios.
