Wealthy families are rushing into bonds and private equity while losing stocks

By Tatiana Bautzer

NEW YORK (Reuters) – Wealthy families invested in bonds and private equity investments in the first half of the year while reducing their equity exposure, according to a survey by private bank Citigroup.

More than half of the 268 family offices surveyed, which have a combined net worth of $565 billion, increased their allocations to fixed income, while 38% increased their private equity holdings. In contrast, 38% reduced their equity allocation.

The shifts were the largest since Citigroup began the study in 2020.

Investors sought private equity investments in the first half of the year while the market for initial public offerings (IPOs) remained sluggish. However, private equity investments are more conservative today than in previous years.

“Family offices focus on high-quality companies in traditional industries with positive cash flows,” Hannes Hofmann, who leads the global family office group at Citi Private Bank, said in an interview.

Respondents’ top concerns were inflation, rising interest rates and uncertainty due to US-China tensions.

“As inflation, market volatility and geopolitical concerns remain at the forefront of ultra-high-net-worth investors and their families, they are readily diversifying their portfolios and considering direct and sustainable investments,” said Ida Liu, global head of Citi’s private bank, in an interview statement.

The family offices surveyed had an average portfolio allocation that included 22% each of public and private equities, 16% fixed income and 12% cash.

Two-thirds of respondents were located outside the United States

(Reporting by Tatiana Bautzer; Editing by Lananh Nguyen and Stephen Coates)