Caution, cash conservation and Covid-19 driving investor sentiment into 2021, says Citi Private Bank survey

Coronavirus caution

Citi Private Bank has released the results of a survey led by the Private Capital Group, providing insight into the thinking of some of the world’s  most sophisticated family offices and investors during an unprecedented health and economic crisis.

In one of the private banking industry’s most comprehensive polls of investor sentiment since the onset of the Covid-19 pandemic, ultra-high net worth individuals and family offices flagged a mood of caution, cash conservation, and monitoring investment opportunities and risks created by the pandemic driving their thinking.

Nearly three-quarters of all respondents described their 12-month investment sentiment as “cautious”. Unsurprisingly, topping the list of concerns were Covid-19, both in terms of vaccine availability, as well as monetary and fiscal response by governments and central banks.

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”.

A remarkable 59 per cent of family offices reported having increased their allocations to direct investments for the next 12 months. In terms of direct sector investments by clients in a post-Covid-19 world, respondents named information technology (24 per cent), healthcare (16 per cent) and real estate (15 per cent) as their three top preferences.

Stephen Campbell, Managing Director and Chairman, Private Capital Group, Citi Private Bank, says: “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.”

The survey was conducted during Citi Private Bank’s Family Office Leadership Program, which was held virtually for the first time due to social distancing restrictions. Over 4,000 family principals and office heads from more than 100 countries joined the event, often described as the “Davos for family offices”.

Peter Clive Charrington, Global Head of Citi Private Bank, says: “The results and analysis in this report give a rare insight into the thinking of some of the world’s most sophisticated family office executives and other leading investors. We asked them about their outlook for the global economy and financial markets, as well as what they are doing with the portfolios that they oversee. The answers about the opportunities and risks ahead – and the actions that respondents expect to take – provides Citi Private Bank the opportunity to better address the challenges and needs of our global clients. We have found to a surprising degree that our clients have remained closer to their Citi team as they navigate these uncertain times.”

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