Family offices double down on direct deals

Family offices are pressing ahead with direct investments despite uncertain macro conditions, showing a striking willingness to embrace illiquidity in pursuit of long-term returns. In Citi’s latest Global Family Office Report, 40 per cent of family offices reported increasing deal activity over the past year, with growth equity and early-stage investments the most popular targets.

This appetite for private markets is echoed by Francois Botha, founder and CEO of Simple, a data provider for family offices. “Families continue to favour direct investments that offer greater transparency, control and alignment with generational objectives,” he says.

Secondaries — involving transaction of existing private equity investments during a fund’s lifecycle — are also seeing rising interest, as companies stay private longer and exits are delayed, he adds.

Among Citi’s survey of 346 family offices, with an average net worth of $2.1bn, larger players led the charge. Offices with more than $500m in assets were significantly more likely to boost allocations across public and private markets, reflecting deeper risk tolerance and more sophisticated infrastructure.

“More family offices are institutionalising their investing operations or opening up to co-investors, which allows them to share expertise and scale opportunities,” says Mr Botha. The result is a “stronger focus” on quality over quantity, with capital concentrated into fewer, more substantial positions.

Regional trends show Latin American family offices taking the most aggressive stance on direct investments, while those in Asia-Pacific increased cash holdings as a buffer against tariff risk.

This quiet repositioning comes as family offices largely held steady on overall portfolio allocations during 2025, opting for patience over haste in the face of geopolitical uncertainty. According to Citi, allocations to public equities, fixed income and real estate remained broadly unchanged from 2024, with private equity the only category showing a significant net increase.

“The goalposts were still moving in June and July,” says Hannes Hofmann, head of Citi’s Global Family Office Group. “Tariffs were being raised in some areas, lowered in others. Family offices did what was rational: they waited for clarity. But they also went into ‘Liberation Day’ with already bullish allocations.”

Thematic bets

Despite April’s tariff-induced volatility, two-thirds of respondents said they had taken steps to boost portfolio resilience, with 39 per cent increasing active management. Mr Hofmann describes a shift from macro-driven positioning toward thematic, stock-level bets. “Families want exposure to AI, energy and healthcare. Expressing those views requires active security selection, often in private markets.”

Yet while investment sophistication is rising, Citi’s report also reveals persistent gaps in governance and operational maturity. More than half of surveyed offices now employ formal investment committees, but 74 per cent admit weaknesses in succession planning and 58 per cent in cyber security.

“The investment function has professionalised fastest, but other areas lag,” says Mr Hofmann. “Most family offices have six or fewer employees. They don’t need to build everything in-house; outsourcing cyber security, for example, can be far more effective.”

Succession also remains a sensitive issue. Although nearly all families cite it as a top concern, only a minority have formalised programmes to prepare the next generation. Citi is increasingly facilitating governance workshops and cross-border networks for heirs. The most successful families treat succession like corporate leadership development, argues Mr Hofmann. “It’s better to integrate the next generation early, in defined roles,” than to leave them facing multi-billion-dollar decisions on day one.

Broader frameworks

A similar pattern is described by Mr Botha at Simple. “The most sophisticated offices are embedding cyber security and governance into broader risk frameworks,” he says. “But next-generation engagement is the most underinvested, and the most consequential. Families that invest here are building long-term adaptive capacity, not just succession readiness.”

According to Mr Botha, more than 12,000 next-generation users are now engaging with the firm’s tools, and a growing number of family offices are institutionalising investment functions or opening up to co-investors to scale capabilities and improve governance.

Looking ahead, the Citi report shows that nearly 40 per cent of family offices expect portfolio returns of at least 10 per cent in 2025, a view shaped by expectations of US deregulation, falling interest rates, and productivity gains from AI. Yet overall sentiment remains neutral across asset classes: even in equities, 59 per cent of respondents described their outlook as neither bullish nor bearish.