Citi Private Bank Family Office Survey Report 2022
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Citi Private Bank Family Office Survey Report 2022: 126 Family Offices Worldwide

17th September 2022 | Hong Kong

Citi Private Bank has released the Family Office Survey Report 2022, a survey of 126 family offices globally on investment sentiment & portfolio actions of clients in 2022 (47% with >$500 million, 53% with <$500 million), the primary focuses of family office, key issues within family office, succession events in next 5 years and family office philanthropic focus.  74% of family offices in the survey reported portfolio losses in 2022 (YTD, Year-to-date), with the top 4 investment concerns for family offices being Inflation, Recession, Geopolitical uncertainty, and Interest rate increases.  More than 80% of family offices expect positive returns in the next 12 months, with top 3 portfolio actions being: Increase in private equity (52%), Real estate (43%), and Public equities (34%).  The top 3 family office concerns are Preserving value of assets, Preparing next generation, Managing transitions and the top 3 primary focus of family office are Investment management (50%), Family unity & continuity (34%), Multi-service such as investments, accounting, tax, admin (32%).  The top 2 Family Office charitable giving channels are Private family foundation (54%), Personal to charities (48%) and the top 4 philanthropic focuses are Education (73%), Healthcare & medical research (42%), Youth development (33%), Arts (31%).  Read the key highlights & summary below. 

” 74% of family offices in the survey reported portfolio losses in 2022, 80% expect positive returns in next 12 months “

 


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Citi Private Bank Family Office Survey Report 2022:

New York City, United States

No. Professionals in Family Office by AUM: Median

  • $250 million: 1 – 3 
  • $250 m to $500 million: 4 – 6 
  • $500 m to $1 billion: 4 – 6 
  • $1 b to $2 billion: 4 – 6 
  • >$2 billion: More than 10

Generation Controlling Family’s Wealth:

  • 1st Generation: 50%
  • 2nd Generation: 35%
  • 3rd Generation: 10%
  • 4th Generation & Beyond: 5%

 

Key Findings:

  • Top 4 Concerns: Inflation, Recession, Geopolitical uncertainty, Interest rate increases
  • 2022 Portfolio YTD Returns: 74% of family offices reported losses (31%: 0 to 10% losses, 38%, 10% to 20% losses)
  • More than 80% of family offices expect positive returns in the next 12 months
  • Top Asset allocation: Public equity & funds (23%), Fixed income (15%), Private equity & funds (15%)
  • Key Portfolio Actions: Increase in private equity (52%), Real estate  (43%), Public equities (34%)
  • Direct Investment Type: Real Estate (37%), Operating Business (33%), Venture / Angel Investing (19%)
  • Sector Preference Direct Investing: Real estate (48%), Information technology (34%), Healthcare (29%)
  • Sector Preference Public Market: Healthcare (49%), Information technology (39%), Real estate (30%)
  • Portfolio Aligned to Sustainability & ESG: Yes (40%), Not a consideration (47%), Not sure (13%)
  • ESG investment type: Direct investments (58%), Funds (53%), Partnerships with family offices (51%) 
  • Crypto Assets: No / not a priority or interest for the family (68%), Considering (19%), Yes (13%)

Key Family Office Findings:

  • Key 3 family office concerns: Preserving value of assets, Preparing next generation, Managing transitions
  • Succession events in next 5 years: Family leadership succession (31%), Family office leadership succession (23%), Trustee succession (12%), None (48%)
  • Primary focus of family office: Investment management (50%), Family unity & continuity (34%), Multi-service such as investments, accounting, tax, admin (32%)
  • Existence of investment committee or board:  Yes (74%), No (26%)
  • Top 2 Family Office Charitable Giving Channel: Private family foundation (54%), Personal to charities (48%)
  • Top 4 Family Office Philanthropic Focus: Education (73%), Healthcare & medical research (42%), Youth development (33%), Arts (31%) 

 

1) Family Office Investment Sentiments

Family Office: Near-term worries on financial market & economy: AUM <$1 b, > $1 billion

  • Inflation: 77%, 76%
  • Recession: 56%, 41%
  • Geopolitical uncertainty: 53%, 56%
  • Interest rate increases: 43%, 47%
  • Energy crisis: 18%, 18%
  • Market volatility: 20%, 9%
  • Social unrest: 9%, 15%

Family Office: Near-term worries by region APAC (Americas + Europe + MENA) 

  • Inflation: 64%, (75% to 86%)
  • Recession: 50% (43% to 58%)
  • Geopolitical uncertainty: 79% (43% to 70%)
  • Interest rate increases: 50% (30% to 64%)

 

2) Family Office Investments

2022 YTD Change in Portfolio Value:

  • More than 20% increase: 2% of Family Office
  • 4% Increase: 4% of Family Office
  • Increase 0 – 10%: 16% of Family Office
  • No change: 5% of Family Office
  • 0 – 10% decrease: 31% of Family Office
  • 10% – 20% decrease: 38% of Family Office
  • > 20% decrease: 5% of Family Office

Family Office Using Leverage & Direct Investment:

  • Leverage: 21% use > 10% of AUM, 16% use < 10%
  • Direct Investments: 26% use > 10% of AUM, 14% use < 10% of AUM

Expected total portfolio returns for next 12 months: AUM <$1 b, > $1 billion

  • More than 15% Returns: 5%, 9%
  • 10% – 15% Returns: 14%, 18%
  • 5% – 10% Returns: 48%, 21%
  • 1 % – 5% Returns: 18%, 18%
  • Flat: 8%, 18%
  • < 1% – 5% Returns: 4%, 12%
  • < 5% – 10% Returns: 1%, 6%
  • < 10% – 15% Returns: 3%, 0%

Asset Allocation:

  • Public equity & funds: 23%
  • Fixed income: 15%
  • Private equity & funds: 15%
  • Concentrated position: 12%
  • Cash & cash equivalent securities: 10%
  • Hedge funds: 4%
  • Commodities: 1%

Passive Investment Allocation:

  • More than 20%: 45% of portfolio
  • 10% to 20%: 25% of portfolio
  • 0 – 10%: 30% of portfolio

Who manages Portfolio:

  • Managed in-house: 47% of family office
  • Managed by external investment managers: 42%
  • Cash / short-term instruments: 11%

Trading Preferences:

  • Active: 43%
  • Not Active: 57%

Trading Preferences by Asset Classes:

  • Equities: 78%
  • Fixed Income: 9%
  • Structured Notes: 7%
  • FX: 6%

Leverage on Portfolio:

  • More than 30%: 7% of family office
  • 20% to 30%: 10%
  • 10% to 20%: 13%
  • Less than 10%: 39%
  • None: 31%

Portfolio Actions in 2022 (2021): 

  • Made more commitments to private equity – 52% (63%)
  • Invested in new real estate opportunities – 43% (45%)
  • Invested opportunistically in public equities – 34% (71%)
  • Raised cash by selling securities across equity allocation in public markets – 28% (19%)
  • Increased fixed income allocation – 20% (18%)
  • Raised cash by selling securities across fixed income allocation –  9% (19%)
  • Sold real estate assets to increase liquidity –  8% (9%)
  • Utilized capital markets or structured products to increase market exposure –  7% (18%)
  • Utilized capital markets to hedge portfolios –  7% (18%)
  • Secondary market liquidation of private equity –  3% (5%)
  • Invested in crypto assets –  1% (16%)

Direct Investments Portfolio:

  • More than 40%: 24% of family office
  • 30% to 40%: 11%
  • 10% to 20%: 29%
  • Less than 10%: 37%

Direct Investment Type:

  • Real Estate: 37%
  • Operating Business: 33%
  • Venture / Angel Investing: 19%
  • Direct Debt: 2%
  • Other: 9%

Sector Preference Direct Investing:

  • Real estate – 48% 
  • Information technology – 34% 
  • Healthcare – 29% 
  • Industrial – 21% 
  • Energy – 18% 
  • Consumer discretionary – 18% 
  • Sustainable companies across sectors/industries – 18% 
  • Consumer staples – 13% 
  • Financials – 13% 
  • Digital assets / blockchain technologies – 7% 
  • Materials – 5% 
  • Telecommunications services – 5% 
  • Utilities – 2% 

Sector Preference Public Market:

  • Healthcare – 49% 
  • Information technology – 39% 
  • Real estate – 30% 
  • Energy – 27% 
  • Financials – 21% 
  • Sustainable companies across sectors/industries – 21% 
  • Consumer staples – 19% 
  • Consumer discretionary – 15% 
  • Industrials – 10% 
  • Digital assets/blockchain technologies – 6% 
  • Telecommunication services – 5% 
  • Materials – 4% 
  • Utilities – 1% 

Portfolio Aligned to Sustainability & ESG:

  • More than 40% of Portfolio: 5%
  • 30 – 40%: 4%
  • 20 – 30%: 5%
  • 10 – 20%: 8%
  • ‹ 10%: 17%
  • Not a consideration: 47%
  • Not sure: 13%

ESG Focus:

  • Reduce waste & pollution and/or promote a circular economy – 69% 
  • Conserve natural resources & biodiversity – 64% 
  • Reduce carbon emissions through clean energy – 63% 
  • Reduce corruption / improve governance (cybersecurity, board diversity, etc.) – 39% 
  • Improve racial and/or gender equality – 20% 

ESG investment types:

  • Direct investments – 58% 
  • Funds – 53% 
  • Partnerships with other like-minded families – 51% 
  • Innovate structures (Eg. generate carbon offsets) – 40% 
  • Project finance – 21% 
  • First-loss equity or concessionary loans – 11% 

Crypto Assets:

  • No / not a priority or interest for the family – 68% 
  • Yes / considered it but still in research mode seeking advice – 19% 
  • Yes /  made minimal commitments (<5% of investable assets) – 12% 
  • Yes /  already invested between 5% – 10% of investable assets – 1% 
  • Yes /  this is a substantial portion of our allocation strategy (› 10%) – 0% 

 

3) Family Office

Key family office concerns:

  • Preserving the value of assets – 65% 
  • Preparing the next generation – 51% 
  • Managing transitions – 43% 
  • Developing a shared family vision – 24% 
  • Managing wealth consumption – 23% 
  • Strengthening governance system – 23% 
  • Developing future family leaders – 22% 
  • Enhancing philanthropic impact – 16% 

Succession events in next 5 years:

  • Family leadership succession – 31% 
  • Family office leadership succession – 23% 
  • Trustee succession – 12% 
  • None – 48% 

Primary focus of family office:

  • Largely investment management – 50% 
  • Family unity and continuity – 34% 
  • Traditional multi-service (investments, accounting, tax, admin) – 32% 
  • Operating business – 15% 
  • Largely commercial real estate – 13% 
  • Philanthropy focused – 10% 
  • Largely capital markets trading/hedging – 7% 

Existence of investment committee or board:

  • Comprises independent advisors – 12% 
  • Comprises family members – 19% 
  • Both independent advisors & family members – 44% 
  • No – 26% 

Services from external investment consultants:

  • Investment manager/security selection – 52% 
  • Strategic asset allocation – 45% 
  • Investment research – 44% 
  • Consolidated reporting – 24% 
  • Other – 4% 
  • None – 25% 

Family Office Charitable Giving Channel:

  • Private family foundation – 54% 
  • Personal giving directly to charities – 48% 
  • Company/ corporate foundation – 19% 
  • Donor-advised fund – 13% 
  • Public charity or foundation – 13% 
  • Charitable trust – 11% 
  • Limited liability company – 2% 

Family Office Philanthropic Focus:

  • Education – 73% 
  • Healthcare & medical research – 42% 
  • Youth development – 33% 
  • Arts – 31% 
  • Environment – 20% 
  • Civil & societal benefit – 19% 
  • Human services – 19% 
  • Food, agriculture & nutrition – 11% 
  • Disaster preparedness & relief – 4% 
  • Public safety – 1% 

 

Citi Private Bank – The Family Office Survey 2022

The Family Office Survey 2022 was initiated during the Private Bank’s 2022 Family Office Leadership Program, held from June 6 to 8. The survey was subsequently released to family office clients globally and was open for input until July 8.   The survey included over 30 questions aimed at gauging investment sentiment and portfolio actions of clients in the wake of macroeconomic headwinds and market volatility in early 2022. It drew responses from nearly 200 participants, of which 126 were completed and considered for this report. 

Of the 126 family office respondents, 123 elected to identify the primary geographic location of their family office. The survey received 74 responses from North America, accounting for 60% of the respondents. that identified geographically. The percentage of respondents from Latin America was 17%, followed by both Asia Pacific and Europe, Middle East and Africa with 11% of respondents respectively.  For statistical purposes and the respondents’ questionnaire, the US dollar was the valuation currency of the survey. Of the total number of family office respondents, 12% had more than $2 billion in assets under management (AUM); 18% had AUM in the $1 billion to $2 billion range; 17% in the $500 million to $1 billion range; 24% in the $250 million to $500 million range; and 29% had under $250 million in AUM 




2021 Data Release
2020 List of Private Banks in Hong Kong
2020 List of Private Banks in Singapore
2020 Top 10 Largest Family Office
2020 Top 10 Largest Multi-Family Offices
2020 Report: Hong Kong Private Banks & Asset Mgmt - $4.49 Trillion
2020 Report: Singapore Asset Mgmt - $3.48 Trillion AUM

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