Rich Families View Markets With ‘Extreme’ Caution, Citi Says

The coronavirus pandemic and the response by governments and central banks have family offices and ultra-wealthy individuals around the world on the defensive, according to a survey from Citigroup Inc.’s private bank.

About three-quarters of respondents described their 12-month investment sentiment as “cautious.” That increased to 84% when adding those who said they plan to exercise “extreme caution,” according to the survey, which was administered in June and July to about 180 participants. Almost one-in-four said they were concerned about social unrest.

The misgivings come as the global death toll from the pandemic has topped 200,000 in the U.S and almost 1 million globally. The blow from the virus has put gross domestic product on track to grow just 2% in 2020, according to Bloomberg Economics’ projection, which would be the slowest on record since reforms in the late 1970s. About half of respondents in the Citi survey expected total portfolio returns in the next year of only 1% to 5%.

David Bailin, Citi Private Bank’s chief investment officer, said the caution expressed in the survey “may portend” a missed opportunity. Global stocks have recovered quickly from the coronavirus-fueled selloff, rebounding more than 45% since March and hitting a record high earlier this month.

“We envision a period of recovery of small-and medium-sized business and accelerating global growth in 2021 and 2022 based on the amount of stimulus issued by governments and further benefits from innovation globally,” Bailin said.