5 minute read

Ever wonder how the ultra-rich manage their money? The results from Citi Private Bank's Global Family Office Survey offer a behind-the-scenes look at the investments of the very well-off, as well as the current market views of their money managers.

What do the results say?

Family offices – private companies that manage the assets of ultra-rich families – seemed confident about future returns across the board. A near unanimous 97% of respondents expected positive returns in the next year. About half of them forecast between a 5% and 10% return, while a third anticipated 10% to 15%.

That optimism isn't unfounded. Now that many major central banks have a handle on inflation, they’re trimming interest rates to give economies room to breathe. Crucially, the US seems on track to avoid a recession. The S&P 500 typically returns more than 10% after the first interest rate cut – if the US economy avoids a recession.

And it seems cash is no longer king – family offices have since been moving into bonds and stocks. Almost half the respondents increased their exposure to bonds since last year, which makes sense: bond yields are near their highest levels in years.

At the same time, 43% increased their holdings in stocks, and 40% upped their private equity weighting. It looks like family offices bought the dip back in August and are puffing up their stock portfolios. That left their overall allocations looking like this:

What’s the takeaway here?

The survey highlights a principle that applies to investors at all levels: don't leave your cash sitting idle. The ultra-rich are putting their money to work across asset classes like stocks, bonds, and alternative assets to earn higher returns. If you’re looking for a similarly diversified investment mix, our General Investing portfolios might fit the bill.

 Investors’ Corner: What the ringgit’s strength means for your investments

From a 26-year low against the US dollar last February, the Malaysian ringgit has since strengthened sharply. And it’s good news for investors – a stronger ringgit goes further, effectively making it less expensive to invest in US markets.

It's important to remember, however, that successful investing is less about timing the market, and more about time in the market. That's where dollar-cost averaging (DCA) comes in – investing a fixed amount at regular intervals, regardless of exchange rates:

• When the ringgit is weak, it converts to fewer dollars, but US assets are more valuable.
• When the ringgit is strong, it converts to more dollars, letting you buy more US assets.

If you’re already invested in the US, your portfolio might have lost some value in ringgit terms. This doesn’t mean your investments have performed poorly – rather, it may be a reflection of the exchange rate, and only a paper loss if you're investing for the long haul. More often than not, long-term growth outweighs any short-term currency movements.

Ultimately, the ringgit's strength can be a chance to build your portfolio at a discount. If you’re looking to do just that, check out our General Investing portfolios – they’re built with assets from across the globe, including the US.

📖 A Little Context: Cash is king?

The phrase "cash is king" has been popular in financial circles for decades. It's believed to have originated in the 1980s, gaining widespread use after the global stock market crash of 1987.

Cash is considered financial “royalty” because of its flexibility. It’s seen as a safe haven because it doesn't fluctuate in value like stocks or bonds, and having cash on hand allows investors to quickly capitalise on investment opportunities, especially during market downturns.

But its reign isn't absolute. In low interest rate environments or during periods of high inflation, holding too much cash can lead to missed opportunities or loss of purchasing power.

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* The projected rate is not guaranteed and is as of 31 July 2024. It is based on the Gross Yield provided by the fund manager.

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