[SINGAPORE] Family offices in the Asia-Pacific region responded more vigorously to tariff turmoils than their counterparts elsewhere, a report has found.
In the market turmoil following the US’ tariff announcement in April, Apac families led the way in allocating to perceived defensive asset classes, geographies and sectors, said Citi in its 2025 Global Family Office Report released on Tuesday (Sep 16).
Some 45 per cent of Apac family offices also cited active management as their response.
Just 28 per cent of Apac families said they did “nothing”, compared to the global average of 37 per cent.
“Rather than liquidate holdings in response to the tariff turmoil in April, a common reaction seems to have been adding to portfolio resilience,” Citi noted in the report.
This comes as trade disputes, tariffs and US-China relations have become the top concerns of respondents this year, replacing the concerns over interest rates.
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Family offices in Apac and North America were “especially likely” to cite trade disputes and tariffs as a leading factor of concern, given the important commercial ties between their regions.
Concerns over US-China relations were also “as expected… especially acute” in the Apac region, Citi said.
This may have led to them prioritising liquidity, resulting in an average of 18 per cent in cash holdings.
But overall, family offices globally largely maintained their asset allocations and made fewer shifts than last year.
“Ongoing trade and monetary policy uncertainty, geopolitical tensions and fiscal concerns may have kept many family offices in wait-and-see mode,” Citi said.
Of those that did make changes, bullish shifts outnumbered bearish ones, particularly in private equity followed by fixed income and public equity, although sentiments seemed less bullish than 2024, Citi noted.
All regions saw a substantial positive net balance of family offices reporting increases in their private equity allocations.
Meanwhile, enthusiasm for public equity was slightly greater in Apac, with a net gain of 14 per cent of family offices increasing allocations, compared to an average 7.7 per cent elsewhere.
Families are also still bullish on their portfolio returns, with some 83 per cent of Apac family offices anticipating portfolio returns above 5 per cent this year.
Citi said possible drivers of this positive sentiment include potential US deregulation, interest rate cuts and advancements in artificial intelligence (AI).
Nevertheless, the levels of bullishness have generally receded since last year’s survey, where at least 90 per cent of most regional respondents expected portfolio returns above 5 per cent in mid-2024, Citi noted.
There was also little consensus as to which asset classes could potentially drive portfolio performance, with sentiment neutral across all asset classes on a six to 12-month horizon.
Looking ahead, Citi expects US tariffs, monetary policy and the AI revolution will be key macro themes to watch.
“There are the impacts of US tariffs, which are only just beginning to be felt in the real economy,” it said. “Companies are still assessing how much of the tariffs they can pass on to consumers.”
The transmission of rate cuts into higher growth may fall short as hiring and investment plans are currently more hindered by trade and policy uncertainty than by elevated financing costs, it added.
Meanwhile, heavy capital spending in AI has yet to translate into results on the same scale, which is something to monitor in future earnings reporting seasons.
“That said, we expect corporations to rely increasingly on AI tools for growth, and less on enlarging their workforces. If so, we may see less demand for labour and gains in productivity,” Citi said.
The report drew responses from 346 participants from 45 countries, with an average net worth of US$2.1 billion.
