The world’s largest pools of private capital did not flinch in 2025. They rebalanced at the margins, upgraded risk controls, and kept capital fully at work while the tariff shock in April rattled screens. That is the central message from Citi’s 2025 Global Family Office Report, a survey of 346 family offices across 45 countries with an average family net worth above $2 billion. The data point to a patient, professional investor class entering the final quarter with measured optimism, tighter risk plumbing, and a clear bias for deal selection over broad factor bets.

Positioning: small moves, clear intent

Allocations were remarkably steady compared with 2024. Public equities remain the single largest bucket at about 27% of portfolios, followed by fixed income near 15% and cash around 13%. Alternatives collectively hover near two-fifths of assets, with private equity around 20% and real estate near 14%. Read that as a vote for diversification and compounding rather than tactical whipsawing. Where families did lean, the tilt was telling: private equity saw the most bullish skew, with increases outnumbering declines by a wide margin, while “no change” dominated in fixed income and real estate as many waited for policy clarity.

Behind those steady weights sits an equally deliberate response to the April tariff shock. Nearly two-thirds took action: four in ten leaned into active management, a quarter shifted toward defensive asset classes, and meaningful cohorts added hedges or rotated to more defensive sectors and geographies. The posture is consistent with institutional playbooks: reinforce ballast, preserve option value, and let core convictions compound.

Returns: constructive into the close

Despite a choppy first half, mark-to-market snapshots as of mid-year were mostly positive, with a majority up low-single digits and a quarter up double-digits. Looking at the full year, the center of gravity sits in the 5–10% band, with nearly a third aiming for 10–15% and a small but notable group expecting more. The drivers cited across the survey and CIO commentary will be familiar to any investment committee: prospective U.S. deregulation, rate-cut momentum outside the U.S., and productivity tailwinds from AI adoption. The nuance is where that optimism lands, less in sweeping calls on asset classes and more in the expectation that selection and structure will pull their weight.

Risk: top of mind, better handled, except in two places

When families talk risk in 2025, they talk trade. Trade disputes and tariffs took the top slot among near-term market concerns, with U.S.–China relations a close second and inflation still very present. Worries about the policy rate path receded from last year’s peak as global cuts broadened. Importantly, families say investment risk management is in good shape, stress testing, hedging, exposure mapping across liquid and illiquid sleeves, but two areas lag: cybersecurity and geopolitics. That gap shows up again in operational and governance sections of the report and should be high on year-end board agendas.

Leverage policy underscores the same caution. About half use no portfolio leverage at all; another quarter stay under 10%. For multi-generational capital, that restraint is rational. With correlations between long-duration bonds and equities having drifted higher at points this cycle, families are relying less on financial engineering and more on asset-mix design, quality bias, and duration control to do the de-risking.

Private equity: still the engine, just with a sharper pencil

Direct investing remains a defining feature: roughly seven in ten family offices are active, and about four in ten increased activity in the past year. Within directs, growth-stage companies are the preferred hunting ground, followed by early stage, with secondaries now a larger slice than pre-IPO as families adapt to slower exit markets. On the fund side, growth equity led allocations, then buyout, then venture. The throughline: families like being closer to cash-flow visibility and value-creation levers, and they’re pragmatic about liquidity, willing to buy time (and IRR) via secondaries when IPO windows narrow.

Control appetite is steady but selective. A large majority still own controlling stakes in operating businesses, both a source of wealth and a unifier of family purpose, but only a minority are actively pursuing new control acquisitions through their family offices. Where acquisition interest exists, the “sweet spot” EBITDA sizes skew to the sub-$25 million range, with larger families more open to bigger targets.

Geography: home bias is real, and rational

On average, 60% of portfolios are allocated to North America, with Europe and Asia Pacific ex-China together accounting for most of the remainder. Home bias shows up strongly in North America and meaningfully in other regions too. That is not just comfort; it is a recognition of rule-of-law, market depth, and sectoral leadership (not least in AI and software) that investors are reluctant to dilute. The CIO section adds a caution that U.S. equity valuations sit well above long-term averages relative to other markets, which is one reason many families counterbalance with quality short-duration fixed income and selective non-U.S. exposures.

Digital assets and AI: pragmatic adoption

Digital assets remain peripheral. A large majority report no allocation; among those with exposure, most cap it at under 5% and prefer familiar wrappers like ETFs and private funds. Interest is highest among larger, more resourced family offices, and the tone is exploratory rather than evangelical.

AI, by contrast, is moving from exploration to deployment inside the family office. Adoption has nearly doubled versus last year in two concrete lanes: automating operational tasks and augmenting investment research and forecasting. The same offices cite barriers, internal expertise, vendor sprawl, security, but the direction of travel is one-way. In investment portfolios, the CIO view stays steady: quality growth franchises that are net beneficiaries of AI spend remain core, but concentration risk needs explicit governance.

Governance and the “office” in family office

The investment function is the most professionalized part of the enterprise: investment policy statements, committees, and external advisors where needed. The rest of the shop is catching up. Most family offices run lean, nearly two-thirds have six or fewer employees, which explains why non-investment services lag demand. The biggest service gaps are next-generation preparation and family unity/continuity. Those gaps widen with each generational handoff and show up later as investment frictions if left unaddressed. Year-end is the right moment to re-baseline the operating model: which services remain core and internal, which shift to specialist providers, and what the measurement system is beyond “we beat the benchmark.”

Decision rights are clear and kept close. Even when families outsource research, allocation support, or specialized sleeves (cybersecurity, legal, insurance), final investment decisions typically stay in-house, either with family principals, professional CIOs, or investment committees. That line of accountability is a quiet edge of the model.

CIO read-across: fully invested, neutral risk, quality on top

Citi’s CIO lens inside the report fits the survey’s posture. The guidance is to remain fully invested with neutral overall risk, emphasize quality equities, especially large-cap secular growers tied to AI demand, and trim exposures most vulnerable to tariffs and margin compression. With long bonds providing less diversification at times, short-duration high-quality fixed income earns its keep as ballast. The CIO also flags three macro swing factors into 2026: (1) how much of the tariff burden companies can pass through without denting demand; (2) how far central banks can cut before growth and profits re-accelerate; and (3) whether AI capex converts from promise to broad-based productivity in reported results. Each of those will feed directly into 2026 earnings and, by extension, the multiple families are willing to pay.

A pragmatic year-end checklist for family offices

1. Re-underwrite equity quality. Re-score top-10 positions for tariff sensitivity, pricing power, and AI leverage. Trim where narratives outran unit economics.
   
   
2. Lock in ballast. If 2025’s rally extended duration by drift, consider re-centering to short-duration, high-quality income that actually diversifies.
   
   
3. Make secondaries a standing lane. With IPOs uneven, build a repeatable process for secondary funds and direct secondaries to manage liquidity and vintage diversification.
   
   
4. Close the two risk gaps. Fund a cybersecurity roadmap and a geopolitical risk framework that ties directly to portfolio exposures, supply chains, and data posture.
   
   
5. Professionalize beyond investing. Commit a 2026 operating plan to next-gen education and family governance mechanics; the return shows up in investment patience and cohesion.
   
   
6. Aim AI where it pays now. Workflow automation and research triage deliver quick wins; treat model risk and vendor security as first-order design points, not afterthoughts.
   
   

The 2025 story is not about dramatic pivots. It is about discipline: staying invested, letting compounding work, and tightening the bolts where the world has shown cracks, trade frictions, fragile hedges, human capital inside the office. If families carry that same posture into 2026, the quiet capital will keep doing what it does best: compound without drama, and be ready when prices slip to levels worth owning in size.

Ref:

https://www.privatebank.citibank.com/doc/family-office/2025-global-family-office-report.pdf

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