Investment Strategies
UHNW, Family Office Investors Wary Of Risks - Citi Private Bank Survey

The findings chime with the comments made to this publication from wealth management professionals, who have said they are trying to educate clients to expect future returns to be on the moderate side, contrasting with the past decade.
A Citi Private Bank study of 179 respondents from family principals to office heads shows that they are mostly cautious about the investment outlook for the coming 12 months. This is unsurprising considering the effects of COVID-19 and the uncertainty of any new tax and monetary policy that they might face.
The survey, from the private bank’s Family Office Leadership Program, found that nearly three-quarters of respondents took a cautious stance. Ultra-high net worth clients are taking a conservative position, although they also watch opportunities and risks that the global pandemic generates.
Going into 2021, nearly half of those surveyed expected meagre total portfolio returns in the next four quarters of 1 per cent to 5 per cent. When asked what portfolio changes they now plan to make, 56 per cent reported making “some tactical changes,” while only 14 per cent reported making “significant portfolio changes.”
The findings chime with the comments made to this publication from wealth management professionals, who have said they are trying to educate clients to expect future returns to be on the moderate side, contrasting with the past decade. The industry continues to wrestle with how to deliver returns for controlled amounts of risk at a time of almost zero or even negative interest rates.
Among other findings, Citi Private Bank said that a “remarkable” 59 per cent of family offices said they have boosted allocations to direct investments for the next 12 months – continuing a theme of UHNW individuals are being drawn to this space (see a discussion on direct investing here). In terms of direct sector investments by clients in a post-COVID world, respondents named information technology (24 per cent), healthcare (16 per cent) and real estate (15 per cent) as their three top preferences.
“Our findings capture the sentiment of respondents from all regions of the globe. We find that family offices and ultra-high net worth individuals have weathered the crisis well. They are positioned to deploy further capital as they see opportunities arise, especially in private markets. However, it cannot be ignored that the survey found liquidity to be at a premium, and clients often willing to sacrifice short to medium-term returns to maintain that,” Stephen Campbell, managing director and chairman, Private Capital Group, Citi Private Bank, said.
“The asset allocation responses are not surprising given that many family offices have higher cash allocation even prior to the crisis. Higher volatility expectations with huge market returns last year results in rebalancing and also raising cash,” a spokesperson for the private bank told FWR when asked about the study. “This is also reflected in the performance of the various family offices that responded to our surveys where in over 20 per cent had positive performance and 42 per cent of the respondents had less than 10 per cent negative performance given that we had very high volatility. From prior global crisis periods, it is relatively common knowledge that many investors stayed in cash and missed participation in a big run in the markets as in 2009-2017. Focusing on staying invested for long term objectives and showcasing our asset allocation positioning are the key ways to engage with clients."
Citi Private Bank reckons the ultra-low interest environment will continue to 2020.
“Many clients point to Fed commentary and also our views when it comes to interest rate environment going forward. From our recent survey of family offices, a majority of the respondents see this low interest rates continuing into late 2021 as well. Many family offices are taking advantage of these low rates by refinancing, increasing lines of credit, or both,” the spokesperson added.
The survey was taken from a program held from June 15 to July 8, 2020, with polling online. It drew responses from a total of 179 participants. Of the respondents, 71 per cent were those with family offices, while the remaining 29 per cent were ultra-high net worth individuals who do not have a family office. In total, respondents hailed from 103 different countries.