Family Offices in Asia Pacific are investing more in public equity and fixed income, and are bullish on private equity, Citi Private Bank Survey showed Wednesday.

Citi said in a statement that 68 percent of family offices reported increased allocation into public equity – the highest percent relative to other regions.

Meanwhile, family offices said they were positive on the outlook for global developed equities (48 percent), direct private equity (49 percent) and private equity funds (48 percent).

Direct investing activity was highest in Asia Pacific, with 69 percent of respondents reporting increased and significantly increased activity.

Results also show an interest in a broad range of activities across the merger and acquisition spectrum: strategic acquisitions (20 percent), joint ventures (23 percent), divestitures (9 percent) and mergers (14 percent).

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

The survey also showed family offices are leading in best practices such as separating the family office from the family business (75 percent) and having a leadership succession plan (51 percent).

74 percent of respondents said they were well or very well prepared for leadership transitions.

Cost (45 percent) and regulatory compliance (48 percent) 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.

The survey also revealed a shift in portfolio allocations. Public equities and fixed income saw their weightings rise from 22 percent to 28 percent and 16 percent to 18 percent, respectively.

Private equity also dipped from 22 percent to 17 percent, which may have been accentuated by valuations taking longer to adjust upward compared to those of public equities.

“The family office industry in Asia continues to grow and evolve rapidly – becoming ever more complex with time,” says Bernard Wai, Asia Pacific Head, Global Family Office Group, Citi Private Bank.

Ida Liu, Head of Citi Private Bank, added that their family office clients are increasingly becoming more global as they seek to create and preserve wealth amidst new market challenges and opportunities.

“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 toward public and private equity,

“Family offices are focused on the future as they navigate evolving markets worldwide,” she added.

Globally, family offices are putting their cash to work by making significant portfolio shifts from liquid resources to fixed income, public and private equity, said the survey.

Continued optimism is seen among family offices around the outlook for portfolio performance over the next twelve months, with 97 percent of respondents expecting positive returns.

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

Family offices are also 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.

The survey also showed asset preservation and preparing the next generation for future responsibilities are families’ top concerns.

Meeting family members’ expectations is regarded as family offices’ top challenge.

The 2024 Family Office Survey, which unveiled trends among family offices in Asia Pacific and globally, received a record number of respondents this year, with 21 percent of respondents from Asia Pacific.

Asia Pacific family offices optimistic despite concerns over economic uncertainty, says a report