Family offices in the Asia-Pacific region are leading the way in deploying more capital into public equity and increasing direct investing, according to a recent survey.

In Asia-Pacific, 68% of family offices reported increased allocation into public equity – the highest percent relative to other regions, finds Citi Private Bank’s global family office group’s 2024 Family Office Survey, which received a record number of respondents this year, making it the most global and comprehensive survey of its kind, with 21% of respondents from Asia-Pacific.

Family offices in the region, the survey reveals, are positive on the outlook for global developed equities (48%), direct private equity (49%) and private equity funds (48%).

As well, direct investing activity was highest in Asia-Pacific, with 69% of respondents reporting increased and significantly increased activity.

There is an interest by family offices, the survey details, in a broad range of activities across the merger and acquisition spectrum –  strategic acquisitions (20%), joint ventures (23%), divestitures (9%) and mergers (14%).

In addition, 63% of respondents expect their portfolios to increase by 10% or more in the coming year, the highest percent relative to other regions.

Focus areas, challenges

Family offices in Asia-Pacific, the survey shares, are leading in best practices like separating the family office from the family business (75%) and having a leadership succession plan (51%). 

And 74% of respondents say they are well or very well prepared for leadership transitions.

Cost (45%) and regulatory compliance (48%) are seen as the main challenges for family offices in Asia-Pacific, which may be because the family office industry is relatively new and developing rapidly in the region. There is also more outsourcing to external service providers in the region.

As well, there is a shift in family office portfolio allocations. Public equities and fixed income saw their weightings rise from 22% to 28% and 16% to 18%, respectively. Private equity also dipped from 22% to 17%, which may have been accentuated by valuations taking longer to adjust upward compared with those of public equities.

Global themes

Away from the Asia-Pacific region, family offices globally, the survey points out, are putting their cash to work by making significant portfolio shifts from liquid resources to fixed income, public and private equity.

And there is continued optimism among family offices around the outlook for portfolio performance over the next 12 months, with 97% of respondents expecting positive returns.

The future path of interest rates is the top concern followed by geopolitical issues – such as US-China relations and the conflict in the Middle East.

Family offices are growing their portfolio exposure to artificial intelligence – which likely contributed to strong returns over the last year. However, the adoption of this technology into family office operations is lagging.

Asset preservation and preparing the next generation for future responsibilities, the survey notes, are families’ top concerns. Meeting family members’ expectations is regarded as family offices’ top challenge.

“Our family office clients are increasingly becoming more global as they seek to create and preserve wealth amid new market challenges and opportunities,” says Ida Liu, head of Citi Private Bank. “As interest rates evolve and geopolitical challenges persist, ultra-high-net-worth investors and their families are putting cash to work and shifting their portfolios towards public and private equity. Family offices are focused on the future as they navigate evolving markets worldwide.”