Family offices double down on stocks and private equity even as inflation spurs worry, Citi survey finds

Citi Wealth's survey of 351 family offices found 63% identify inflation as their top investment concern, up from 37% in 2025, while concern over trade disputes and tariffs fell to 18% from 60%. Despite this, risk appetite remains intact: a net 34% increased public-equity exposure over the past year, and nearly one-third net plan to raise developed-market equity allocations over the next 12 months. Family offices also expect to add private equity and direct investments, while a net 12% plan to reduce private-credit exposure; 37% of North American respondents intend to increase real-estate allocations.

Analysis

The actionable signal is not a discrete asset-allocation flow but a potential persistence of “stay invested” behavior despite elevated macro anxiety. That combination favors liquid developed-market equities with pricing power and durable free-cash-flow over long-duration growth: capital can remain risk-on while inflation uncertainty raises the discount-rate premium applied to unprofitable or highly levered assets. The near-term impact is likely modest because family-office deployment is gradual and often executed through managers rather than index products.

The more differentiated implication is a relative headwind for private-credit fundraising and secondary-market sentiment. If wealthy allocators reduce incremental commitments while maintaining liquidity for direct deals, BDCs and alternative managers with meaningful private-credit fee exposure could face slower AUM growth, tougher underwriting competition for new capital, and lower incentive-realization expectations over the next 6-18 months. That is more relevant to BX, KKR and BDC proxies such as ARCC than to broadly diversified banks.

North American preference for ownership assets should not be read as a blanket bullish call on listed REITs. Direct-property demand may support transaction volumes and private valuations, but public REIT multiples remain primarily governed by Treasury yields and refinancing spreads; a renewed inflation surprise can compress those multiples even as private buyers remain active. Citi's survey is strategically useful for positioning but not a tradable catalyst for C: its wealth franchise benefit is indirect, slow-moving, and unlikely to alter near-term earnings expectations.

Contrarian view: the underowned inflation hedge remains commodity-linked cash flow rather than commodities themselves. If inflation reaccelerates while investors retain equity exposure, energy producers can offer a more efficient hedge than direct commodity allocations; the thesis fails if growth slows enough to weaken crude demand or if oil prices fall despite higher realized inflation.

Key Decisions for Investors

• Maintain a 1-3 month quality/value equity tilt: long SPHQ or QUAL versus short ARKK, sized as a relative-value trade rather than a directional beta call. The expected payoff is multiple resilience if real yields drift higher; exit if 10-year real yields fall materially and earnings revisions reaccelerate for unprofitable growth.
• Watch for a 6-18 month private-credit relative-value setup: short BIZD versus long KKR only after evidence of weaker BDC NAV marks, declining originations, or softer fundraising disclosures. Do not initiate solely on the survey; the missing confirmation is manager-level commitment and redemption data.
• Use XLE or a basket of XOM/CVX as a small inflation-convex hedge against an equity book over the next quarter, with a stop tied to a sustained decline in Brent and deteriorating global PMIs. Prefer producers over broad commodity exposure because shareholder returns provide carry if inflation remains sticky without a commodity spike.
• No standalone trade in C. Treat subsequent wealth-management net-new-money growth, fee-rate trends, and private-bank client activity as the falsification/confirmation set; absent an earnings-relevant change in those metrics, the survey should not affect position sizing.