Family offices are ramping up their investments in hedge funds, with allocations significantly increasing during the second quarter of 2024, according to a report by AlternativesWatch citing new analysis by Citi Private Bank.
This surge has contributed to record levels of capital within the hedge fund industry.
Citi's latest quarterly Family Office Investment Report, which analysed the investment behaviours of around 1,200 single-family offices worldwide, revealed that hedge fund allocations grew in every region except Latin America during Q2.
Private equity also saw notable increases in allocations in certain regions, reflecting the broader interest in alternative investments among family offices.
Overall, hedge funds now represent approximately 3% of global family office assets, while private equity accounts for 7.3%. By comparison, equities remain the dominant asset class, comprising about 35% of family office portfolios on an equal-weighted basis, with fixed income accounting for roughly 22.4%.
In North America, family offices increased their hedge fund allocations by 0.29% during Q2, bringing the total to 2.4%. Private equity investments in the region remained relatively stable, dipping slightly by 0.03% to 8.7%, with real estate and commodities also showing little change.
Citi's research highlighted that North American family offices displayed broad interest in hedge funds, particularly in credit-based strategies, during the second quarter.
In the EMEA region, hedge fund allocations rose by 0.35% to 3.8%, while private equity allocations increased by 0.75% to 8.4%. The Asia-Pacific region also saw a 0.26% rise in hedge fund allocations, reaching 3.6%, while private equity remained steady at 4.6%, with only a slight decrease of 0.08%.
By contrast, Latin American family offices slightly reduced their hedge fund holdings by 0.09%, ending Q2 at 3.3%. However, they increased their investments in private equity by 0.32%, bringing the allocation to 5.3%.
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