The private banking arm of Citigroup publishes its regular temperature check on what family offices around the world are doing in asset allocation.

Despite a further delay in US interest rate cuts and greater geopolitical uncertainty, many family offices raised their allocations to fixed income and equities in the second quarter of 2024, while further trimming their cash holdings, a survey by Citi Private Bank, issued late last week, showed. 

Within the equities category, family offices tilted towards developed countries’ large-cap stocks. As regions apart from North America saw cuts in allocation to small and mid-cap stocks, exposure to emerging markets equities was down or or flat.

Within fixed income sub-asset classes, flows were mixed across all four regions with no clear preference. Allocations to hedge funds rose, while activity in the commodities space was muted, the US private banking group said. 

Data was taken from more than 1,200 single family office clients globally.

“Many risk assets rallied in the second quarter of 2024, particularly equities. This followed our family office clients’ broad-based additions to equity holdings in the first three months of the year. By contrast, they were more ambivalent about fixed income, which has since done somewhat worse,” Hannes Hofmann, head of the global family offices group, and Shu Zhang, head of the global investment lab, at Citi PB, said in a preamble to the report.

The report comes at a time when, as demonstrated two weeks ago when global equity markets tumbled amid worries about stuttering US economic growth, there are concerns whether gains to equities so far this year could run out of steam. 

“Equities saw increased allocations in three of four regions on an equal-weighted view. For family offices with large portfolios at Citi Private Bank, allocations rose in every region,” the report said. 

Hedge fund allocations went up in every region bar Latin America (equal-weighted basis), while the trend was mixed for family offices with larger portfolios at Citi Private Bank. Private equity saw significantly increased allocations in two regions, with minor retreats in two other regions (equal-weighted basis). There was no clear trend in real estate or commodities between regions,” it continued. “Allocations were flat to positive in all regions bar Latin America on both an equal- and capital-weighted basis. Preferences for fixed income sub-asset classes were mixed across regions.” 

Source: Citi Private Bank