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.

📺 From the Newsroom to You

Central banks are pivoting towards looser monetary policy, and that’s likely to have an impact on your investments. Our Chief Investment Officer, Stephanie Leung, shared some insights with The Edge Singapore on navigating falling interest rates:

• As interest rates fall, cash instruments like fixed deposits will become less attractive. This becomes clearer when you consider the long-term picture. Global inflation has averaged about 4% annually – if you've been relying on fixed deposits yielding 2-3%, your cash has actually been losing 1-2% of its value each year on average. Consider a well-balanced portfolio of assets that can outperform cash in the current environment.

• A changing tide brings new opportunities. As interest rates fall, cyclical sectors like industrials could see a boost. And in the fixed-income market, yields are at multi-year highs – a “great reset” for bonds. With more rate cuts on the horizon, there's now an opportunity to consider locking in longer-duration, high-quality bonds.

Falling interest rates highlight the importance of investing across assets that can provide better returns. Ultimately, it’s about getting your money working harder for you.

📖 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.

🗓️ Save the Date

Ready to start investing with confidence?

We’re kicking off our NEW 4-part Master Your Finances webinar series with a bang! 💥 Join us for “Smart Investing: Steps to Protect and Grow Your Wealth” on 8 October at 7 PM, as we’ll be sharing the essential strategies that apply in today’s dynamic markets. 

Here’s what you’ll gain:

• Insights into how economic cycles affect your investments and how to stay ahead
• Proven diversification techniques to build a resilient portfolio
• How to leverage technology to adapt to market changes

If you're looking to build a solid foundation for confident investing, this is your chance! ⏳Join us on 8 October at 7 PM.

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Earn a 3.7%* p.a. portfolio yield with our new low-risk, income-generating portfolio. Enjoy reliable passive income, flexible payout options, and 100% trailer fee rebates every quarter.

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* The portfolio yield is indicated for an SGD-hedged portfolio as of 31 August 2024. The yield is adjusted for all relevant costs, fees and rebates. It may change depending on market conditions and is not a guarantee of returns.

J.P. Morgan Asset Management is not affiliated with StashAway. It is not responsible for investment decisions for StashAway Income Investing portfolios and makes no representations as to the advisability of investing in the same. Refer to stashaway.sg/income-investing for full disclosure.