Citigroup: Inflation surpassing tariffs becomes the number one concern for family offices; the wealthy flock to gold and US stocks.

The world's wealthiest investors are listing inflation as their top risk. According to a recent survey by Citigroup, inflation has surpassed trade wars and tariffs to become the biggest concern for family offices this year , a trend that is profoundly influencing the asset allocation logic of ultra-high-net-worth individuals.

According to Citigroup’s annual Global Family Office report, interest rate changes and the stability of the global financial system are the most pressing concerns for surveyed institutions, following closely behind inflation.

In terms of asset allocation, publicly traded equities are listed as the preferred asset class for future net increases. Over 90% of surveyed family offices reported positive returns in their portfolios this year, and nearly half said they had increased their holdings of listed stocks in the first half of the year.

Gold's appeal has also risen significantly – according to Andy Sieg, head of Citi's wealth management business, gold appears in almost every client conversation he has now, a stark contrast to two years ago.

Citigroup has recently joined the ranks of London gold market vault and clearing services to meet the growing demand for physical gold from affluent clients.

The survey was conducted between June and July of this year, covering 350 family offices in more than 40 countries.

Inflation concerns spread to ultra-high-net-worth individuals

Inflation has replaced trade wars and tariffs as the primary concern for family offices this year, reflecting the substantial impact of rising living and operating costs on this group.

"People might think, 'They're so rich, why would they care about these things?'" Andy Sieg said in an interview.

"These families are so successful precisely because they are equally prudent in balancing costs and benefits. They are highly sensitive to the fact that certain aspects of their lifestyle have become more expensive."

According to Bloomberg economic research data, three of the world's four major economies have seen inflation rates consistently above 3%, pushing interest rates high and dragging down economic growth. This macroeconomic backdrop has made interest rate trends and financial system stability both core concerns for family offices, reflecting widespread market anxieties about structural pressures on the economy.

US stocks become the top choice for increased allocation, with public markets outperforming private funds.

Despite rising concerns, over 90% of surveyed family offices still achieved positive returns, with nearly half proactively increasing their allocation to listed stocks in the first half of this year.

"We're seeing clients allocating more funds to publicly traded equities because there's no alternative to U.S.-listed companies when seeking growth, stability, and flexibility," said Dawn Nordberg, head of integrated client solutions and global family offices at Citigroup.

Andy Sieg further pointed out that publicly traded equities are listed as the preferred asset class for future net allocations, not only because of their recent solid performance, but also because of concerns about valuations in the private market —especially those assets facing regulatory action or other uncertainties that are difficult for investors to control, which have become significantly less attractive.

Gold's status reassessed; Citigroup expands London vaults.

Inflation concerns are also accelerating the reassessment of gold's strategic value among the wealthy. Andy Sieg says gold is now a recurring topic in almost every conversation he has with clients, a stark contrast to two years ago. He states:

"Previously, wealthy families around the world talked about currency pairs; now they realize that many developed economies face similar dilemmas—dire fiscal situations and high inflation—and perhaps the current 'hard currency' is gold."

To meet this demand, Citigroup is expanding its vault services capabilities, recently joining a limited banking group to participate in gold vault custody and clearing operations in London’s gold center, in order to serve the growing gold allocation needs of affluent clients.

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