Asia was the least optimistic region after Europe, the Middle East and Africa (EMEA) among family offices when it came to predicting portfolio gains for the next 12 months, according to a survey from Citi Private Bank.
In a sign of the prevailing sentiment that markets may have finally bottomed out, there was a high level of optimism for portfolio returns over the next year with 80% of family offices expecting portfolio gains and 62% expecting a 5% or higher increase in portfolio values, according to Citi’s research.
However, Asia was the second least optimistic region with 64% of family offices expecting a positive return. EMEA was the most pessimistic with half expecting a positive return over the next 12 months.
The survey was released to Citi Private Bank’s global family office clients and drew 126 responses. In terms of assets under management (AUM) of the respondents, this was fairly evenly split between those with $500m in AUM and those with below $500m.
Asia was also an anomaly insofar as geopolitical uncertainty topped the list as the biggest worry with 79% of respondents in the region citing it as a concern. In other regions, inflation was the top concern, which possibly reflects the fact that inflation in Asia has been more subdued so far.
The overall optimism expressed by respondents though came despite the fact that globally nearly three quarters of family offices experienced a decline in overall portfolio mark-to-market values since the beginning of the year with 43% experiencing a decline greater than 10%.
Last year, fewer than 11% of family offices experienced any decline.
As far as asset allocation was concerned, public equity made up the bulk at 23%, but the attractiveness of real estate and private equity remained, making up 20% and 15% respectively.
Direct investing also remains a primary focus for family offices, with about a third of them allocating between 10% and 20% of their portfolio to this, while slightly more than a third allocated more than 30%.
