Despite being marred by a lack of rate cuts and greater geopolitical uncertainty, the three months to 30 June saw family offices globally reduce their cash holdings, according to new data from Citi.
The bank’s latest Family Office Investment Report revealed that family offices, instead, showed a preference for both fixed income and equities.
In fact, on average, family offices in Asia-Pacific (APAC) held the greatest allocation to equities than anywhere else in the world, at 40.3 per cent.
Meanwhile, the region was the smallest allocator to cash, at 27.3 per cent.
“Positive momentum for risk assets continued in the second quarter of 2024, albeit somewhat more slowly than in the brisk first quarter,” Citi said on the global outlook for the sector.
“A further easing of inflation, an interest rate cut from the European Central Bank, and hopes of stimulus-driven recovery in China were all helpful for investor sentiment.
“Admittedly, such factors were somewhat offset by the further postponement of US interest rate cuts and the initial reactions to election results in India, Mexico, and France.”
Looking at flows, cash declined on both an equal and capital-weighted basis in APAC, at a loss of 0.6 per cent and 0.9 per cent, respectively.
However, inflows for fixed income were almost twice the rate seen in 1Q24, accounting for 20.5 per cent of net dollars. This trend, Citi highlighted, was even more pronounced for family offices with larger portfolios.
Meanwhile, net dollar flows for equities were positive for the third quarter running, with family offices increasing their allocations on both an equal-weighted (40.4 per cent) and capital weighted (58.2 per cent) basis.
“Developed large-cap equities was the main driver of positive net dollar flows, at roughly twice the rate of the previous quarter,” Citi said.
Expounding on this, the bank said that the buying and selling of individual equities and exchange-traded funds (ETFs) within the US technology sector dominated flows in the three months to 30 June.
“While this mostly focused on the US, there was also buying interest in select Japanese stocks.”
In August, data from Preqin revealed that Australia leads the charge for the highest proportion of private wealth investors across APAC, accounting for 23 per cent of the region.
Breaking this down, Australia, as of January 2024, made up some 25 per cent of single-family offices, and over 10 per cent of multi-family offices within the region.
On the other side of the coin, global family offices have increasingly been looking at APAC as an allocation hotspot in recent months.
Surveying over 300 family offices across seven regions of the world, UBS’ Global Family Office Report from May found more than a third (35 per cent) are seeking to increase allocations to APAC over the next five years, trailing just behind North America (38 per cent).
