Weekly Buzz: 💰 The money moves the ultra-rich are making

Ever wondered 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 their money managers’ current market views.

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.

📰 In Other News: China’s one-two policy punch

Last week, China's central bank unveiled a series of policy changes, including lower interest rates. But economists didn’t think that’d cut it – some argued the need for additional fiscal support to boost consumer spending.

And in what appears to be a coordinated effort, the Chinese government approved just such measures in the days following, pledging support for property developers and homeowners. You can see why its officials felt the urge: recent data suggests that China’s economy could miss its 5% growth target this year – but a boost like this can go a long way.

That’s the first time its property market has been targeted specifically by the country’s Politburo – its top officials – since issues began in 2020, even though it’s been one of China’s biggest economic problems for years. China’s stock market has skyrocketed in response to the series of news: its key Shanghai Composite Index is now up about 20% for the week.

These articles were written in collaboration with Finimize.

📖 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 as 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 the reign of cash 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.