Wealthy Families Increasingly Bullish on Risk Assets, Citi Survey Reveals
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Wealthy families getting more bullish on risk assets, Citi survey shows
NEW YORK (Reuters) - Wealthy families are seeking out risky assets and reducing cash holdings as they turn more bullish about the investment outlook, according to a Citigroup survey. About 97% of the 338 family offices surveyed by Citi's private bank expect their investment returns to be positive over the next 12 months, rising from 95% of respondents last year. "Investors are very optimistic, and we see that even in the kind of risk they are taking," said Hannes Hofmann, head of Citi's global family office group. He cited wealthy families' direct investments in companies during initial funding rounds, which are typically more risky than the later rounds. Growth equity and venture capital investments also comprised a large share of family office allocations in private equity funds, Hofmann said. Meanwhile, the path of interest rates was the top concern for more than half of the respondents, overtaking inflation as the biggest worry for the first time since 2021. More than three quarters of investors surveyed made money last year, compared with 12% of those who lost money and 10% whose portfolios were flat, the survey showed. Families have been gradually reducing their cash positions and adding riskier assets. Higher yields boosted the appeal of fixed income investments, spurring 49% of respondents to boost their allocations. Meanwhile, 43% raised allocations in stocks and 42% added private equity. More than half of the wealthy families surveyed had investments in generative artificial intelligence (AI), but less than 15% had deployed AI in their own operations. "Investors know it will become important, but are not very sure of how to use it for their own investing purposes," Hofmann said. (Reporting by Tatiana Bautzer, editing by Lananh Nguyen)
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Wealthy families getting more bullish on risk assets, Citi survey shows
Wealthy families are seeking out risky assets and reducing cash holdings as they turn more bullish about the investment outlook, according to a Citigroup survey. About 97% of the 338 family offices surveyed by Citi's private bank expect their investment returns to be positive over the next 12 months, rising from 95% of respondents last year. "Investors are very optimistic, and we see that even in the kind of risk they are taking," said Hannes Hofmann, head of Citi's global family office group. He cited wealthy families' direct investments in companies during initial funding rounds, which are typically more risky than the later rounds. Growth equity and venture capital investments also comprised a large share of family office allocations in private equity funds, Hofmann said. Meanwhile, the path of interest rates was the top concern for more than half of the respondents, overtaking inflation as the biggest worry for the first time since 2021. More than three quarters of investors surveyed made money last year, compared with 12% of those who lost money and 10% whose portfolios were flat, the survey showed. Families have been gradually reducing their cash positions and adding riskier assets. Higher yields boosted the appeal of fixed income investments, spurring 49% of respondents to boost their allocations. Meanwhile, 43% raised allocations in stocks and 42% added private equity. More than half of the wealthy families surveyed had investments in generative artificial intelligence (AI), but less than 15% had deployed AI in their own operations. "Investors know it will become important, but are not very sure of how to use it for their own investing purposes," Hofmann said. (Reporting by Tatiana Bautzer, editing by Lananh Nguyen)
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Wealthy families getting more bullish on risk assets, Citi survey shows
NEW YORK, Sept 18 (Reuters) - Wealthy families are seeking out risky assets and reducing cash holdings as they turn more bullish about the investment outlook, according to a Citigroup (C.N), opens new tab survey. About 97% of the 338 family offices surveyed by Citi's private bank expect their investment returns to be positive over the next 12 months, rising from 95% of respondents last year. "Investors are very optimistic, and we see that even in the kind of risk they are taking," said Hannes Hofmann, head of Citi's global family office group. He cited wealthy families' direct investments in companies during initial funding rounds, which are typically more risky than the later rounds. Advertisement · Scroll to continue Growth equity and venture capital investments also comprised a large share of family office allocations in private equity funds, Hofmann said. Meanwhile, the path of interest rates was the top concern for more than half of the respondents, overtaking inflation as the biggest worry for the first time since 2021. More than three quarters of investors surveyed made money last year, compared with 12% of those who lost money and 10% whose portfolios were flat, the survey showed. Advertisement · Scroll to continue Families have been gradually reducing their cash positions and adding riskier assets. Higher yields boosted the appeal of fixed income investments, spurring 49% of respondents to boost their allocations. Meanwhile, 43% raised allocations in stocks and 42% added private equity. More than half of the wealthy families surveyed had investments in generative artificial intelligence (AI), but less than 15% had deployed AI in their own operations. "Investors know it will become important, but are not very sure of how to use it for their own investing purposes," Hofmann said. Reporting by Tatiana Bautzer, editing by Lananh Nguyen Our Standards: The Thomson Reuters Trust Principles., opens new tab Tatiana Bautzer Thomson Reuters Tatiana Bautzer is a U.S. banking correspondent at Reuters in New York. She previously covered banks in Brazil, breaking news on deals by major global corporations, initial public offerings and bankruptcies. She has also delved into corruption scandals at Brazilian conglomerates and business disputes between billionaires. Prior to joining Reuters in 2015, Bautzer worked for business magazines Exame and Istoe Dinheiro and newspapers Valor Economico and O Estado de S. Paulo. She previously served as international correspondent for Valor Economico in Washington, D.C., covering multilateral institutions and trade. Bautzer holds a B.A. in Journalism and an MBA from the University of Sao Paulo.
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A recent Citi Private Bank survey shows that wealthy families are becoming more optimistic about risk assets, with increased allocations to private equity and venture capital. The shift in sentiment comes despite ongoing economic uncertainties.
Wealthy Families Embrace Risk Assets
A recent survey conducted by Citi Private Bank has revealed a growing appetite for risk among wealthy families, despite persistent economic uncertainties. The survey, which gathered insights from 268 family offices and private investment companies across 38 countries, indicates a significant shift in investment strategies among the ultra-rich
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.Increased Allocation to Private Equity and Venture Capital
One of the most notable trends emerging from the survey is the increased allocation to private equity and venture capital. Family offices reported plans to boost their investments in these sectors by 5% and 3% respectively over the next 12 months
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. This shift suggests a growing confidence in the potential returns offered by these higher-risk, higher-reward investment vehicles.Optimism Amidst Economic Challenges
The survey results paint a picture of cautious optimism among wealthy investors. Despite ongoing concerns about inflation, interest rates, and geopolitical tensions, family offices are demonstrating a willingness to take on more risk in pursuit of higher returns. This sentiment is reflected in the fact that 57% of respondents expect returns from risk assets to improve over the next year
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.Shifting Focus on Real Estate
Interestingly, the survey also highlighted a changing perspective on real estate investments. Family offices indicated plans to reduce their exposure to real estate by approximately 1% in the coming year
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. This adjustment may be attributed to the challenges faced by the commercial real estate sector, particularly in light of evolving work patterns post-pandemic.Global Economic Outlook
The bullish sentiment extends to the global economic outlook, with 61% of respondents expressing optimism about the world economy over the next 12 months
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. This positive outlook is particularly noteworthy given the complex economic landscape, characterized by persistent inflation concerns and geopolitical uncertainties.Related Stories
Generational Shift in Investment Strategies
The survey also shed light on a generational shift in investment approaches. Younger generations within wealthy families are showing a greater interest in sustainable and impact investing. This trend is likely to influence future investment decisions and may contribute to the increasing focus on private equity and venture capital, sectors often associated with innovative and sustainable business models
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.Implications for the Broader Market
The growing bullish sentiment among wealthy families could have significant implications for the broader market. As these influential investors increase their allocations to risk assets, it may signal a broader shift in market sentiment and potentially drive increased activity in private equity and venture capital sectors.
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