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Family Offices, Wealthy Investors Wary of Investment Risks

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Three in four family principals and office heads in a new survey indicated a mostly cautious investment outlook for the coming 12 months, Citi Private Bank reported last week.

These investors’ cautious stance is informed by the continuing coronavirus pandemic and uncertainty about the kind of tax and monetary policy mix they might face.

At the same time, they are alert to opportunities and risks that the pandemic may generate, the survey found.

The online survey was conducted by the private bank’s Family Office Leadership Program from June 15 to July 8 among 179 participants from 103 countries, 71% of whom had family offices; the remaining 29% were ultra-high net worth individuals without a family office.

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Looking to 2021, about half of survey participants said they expected meager total portfolio returns in the next four quarters of 1% to 5%.

Asked what portfolio changes they now planned to make, 56% said “some tactical changes,” while only 14% said “significant portfolio changes.”

Among other findings, the survey found that 59% of family offices had boosted allocations to direct investments for the next 12 months, continuing a theme of how ultra-rich individuals are being drawn to this space, according to Citi Private Bank.

As to clients’ top direct sector investment preferences in a post-coronavirus world, 24% of respondents named information technology, 16% health care and 15% real estate.

“Our findings capture the sentiment of respondents from all regions of the globe,” Stephen Campbell, managing director and chairman of Citi Private Bank’s private capital group, said in a statement.

Campbell noted that family offices and ultra-wealthy individuals had weathered the crisis well, and had positioned themselves well to deploy further capital, especially in private markets.

“However, it cannot be ignored that the survey found liquidity to be at a premium, and clients often willing to sacrifice short- to medium-term returns to maintain that,” he said.

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