Family offices have increasingly built portfolio exposure to artificial intelligence – but are less enthusiastic about adopting the pioneering technologies in-house, a survey reveals.
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Over half (53 per cent) of family offices have built portfolio exposure to generative AI technologies through public equities, private equity funds or direct private equity, according to the Citi Private Bank Global Family Office 2024 Survey.
A further 26 per cent are considering adding AI to their portfolios.
Artificial intelligence remains one of the biggest themes for private investments, with the family offices of Jeff Bezos and Bernard Arnault among those that have bet on the sector.
The Citi Private Bank survey, now in its fifth year, asked 338 family office clients questions that sought to capture thoughts on investment sentiment, portfolio positioning, family governance and best practices. Responses were divided by region, generation and portfolio size.
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When it comes to AI investing vehicles, almost a third (30 per cent) of smaller family offices – those with less than $500 million in AuM – favour public equity and private equity funds, while larger FOs had a more pronounced preference for direct investments in private companies (25 per cent) and their smaller counterparts (16 per cent).
There is also a regional divide. Family offices in Europe, the Middle East and Africa reported the highest commitment to AI, with only 12 per cent of firms in these regions not considering it a priority.
Hannes Hofmann, head of the global family office group at Citi, noted that AI shows a higher investment rate compared to previous innovations like cryptocurrencies and ESG.
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However, when it comes to embracing the technology from an operational perspective, adoption of artificial intelligence is lagging. ‘This mirrors much of the broader business environment today, where AI investments and usage are often at a divide,’ Hofmann said in a recent interview.
Only about one in 10 respondents have started employing generative AI to automate basic business processes, such as creating presentations. Another quarter are exploring related possibilities.
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However, few have ventured into the more high-stakes territory of employing the technology in areas such as portfolio construction or optimisation, or risk management.
Despite the low uptake overall, adoption is slightly higher among smaller FOs. ‘This may be due to the intense cost pressures they generally face,’ the report notes. ‘However, entities with more than $500 million will likely catch up soon based on the higher proportion of such larger entities indicating work in progression on generative AI.’
