In recent years, the global economy has undergone significant transformations. The confluence of geopolitical tensions, the fading of demographic dividends, and the deceleration of urbanization have created critical turning points, posing immense challenges for global investors in wealth management and strategic planning. Mr. Zander Yin, co-founder and CEO of Noah Holdings, remarked, “The profound shifts in economic cycles are reshaping the wealth distribution landscape. Against the backdrop of interest rate cuts and a pivot in global monetary policy, investors must elevate their understanding, focus on structural opportunities, and mitigate potential risks.”
Since the establishment of the Noah CIO Office in 2022, the team has published eight investment strategy reports covering macroeconomic trends, industry developments, and policy directions. These reports aim to help high-net-worth clients and professional investors navigate and understand the current era as it unfolds.
At the beginning of 2024, the Noah CIO Office released two reports under the unified theme, "Seize Small Certainties, Invest in Big Trends," focusing on China and global markets respectively. The domestic report emphasized the strategic value of QDII allocation and the importance of healthcare and eldercare resource reserves. It also suggested leveraging hedging tools to create multi-strategy portfolio investments. The global report, meanwhile, focused on three major trends: corporate globalization, breakthroughs in AI, and the strong US dollar. It highlighted the importance of fixed-income assets, rental apartment opportunities, and private credit.
In the second half of 2024, the Noah CIO Office report, "Cognition Shapes Allocation, Actions Achieve the Future," recommended investors consider indices like the Nasdaq 100 and S&P 500 ETFs. It also repeatedly emphasized the value of global multi-strategy, trend-following strategies, and market-neutral hedge fund strategies across several reports.
Mr. Yin stated, "Cognition shapes allocation, and actions achieve the future. The global economy is entering a new phase, marking a critical period for strategic asset allocation adjustments. Geographic choices, respect for probabilities, and a bottom-line mindset are three crucial factors to consider in asset allocation. Investors need to gain deep insights into global economic and political trends, continuously enhance their cognitive capabilities, and scientifically adjust their asset structures to navigate the complex and volatile market environment while capturing growth opportunities in the new cycle."
The following ten asset allocation recommendations from the Noah CIO Office were all precisely validated in 2024.
01. QDII Global Allocation
Noah CIO Office Recommendation: Focus on QDII funds. With domestic currency, investors can access global beta, making QDII an excellent asset allocation option in the current stage. However, QDII quotas may become increasingly scarce in the future.
Validation: In 2024, as global monetary policy shifted to a rate-cutting cycle and a new round of monetary easing began, external liquidity constraints on stock markets were significantly reduced. Overseas markets benefited, boosting the performance of QDII funds. As of the close on December 13, the Wind QDII Fund Total Index (885054.WI) rose from 1,376.49 points at the beginning of the year to 1,604.74 points, a gain of 15.52%.
Trend: The QDII fund index showed a significant upward trend in 2024.
02. Overweight Life Insurance
Noah CIO Office Recommendation: Based on the analysis of passive globalization of enterprises and the changing demographics of the Chinese-speaking population, an era characterized by an aging population, dispersed families, and low birth rates has arrived, presenting increased challenges for retirement planning. Addressing retirement pressure requires two approaches:
1. Building the third pillar (commercial insurance) to plan cash flow in advance, ensuring financial security throughout life and avoiding retirement risks.
2. Reserving healthcare and eldercare resources to support all stages of elderly life—independent, assisted, and dependent living—to achieve ideal retirement conditions.
Validation: With the continued decline in domestic long-term government bond yields, pricing requirements for insurance products increased. On August 2, 2024, the National Financial Regulatory Administration issued Notice No. 18 [2024] on improving the pricing mechanism for life insurance products, capping the maximum assumed interest rate for newly registered participating insurance products at 2.0%, effective October 1, 2024. Benefiting from a domestic environment of abundant liquidity, long-term rates fell sharply by year-end. As of December 16, China’s 10-year government bond yield dropped to 1.7%, and the 30-year bond yield fell below 2%, making high-interest-rate participating insurance products increasingly scarce.
Trend: China’s long-term risk-free interest rates declined rapidly in 2024.
03. Corporate Globalization
Noah CIO Office Recommendation: Against the backdrop of globalization, corporate globalization has become a key driver of economic growth. Through globalization, companies can create global industrial chain layouts, optimize resource allocation, reduce costs, and improve efficiency. In recent years, the government has introduced various supportive policies, such as tax reductions, financial subsidies, and financial convenience measures. These policies provide strong support and assurance for corporate globalization, reducing risks and costs.
Validation: In 2024, policies such as the “Opinions on Strengthening Coordination between Commerce and Finance to Support High-Quality Development of Cross-Border Trade and Investment” and “Opinions on Expanding Cross-Border E-Commerce Exports and Promoting the Construction of Overseas Warehouses” were successively released, bolstering the trend of corporate globalization. As of the close on December 16, the [HK] Internet Globalization Index (887736.WI) rose from 595.42 points at the beginning of the year to 796.35 points, a gain of 36.63%.
Trend: The Internet Globalization Index maintained a strong upward trend in 2024
04. AI Infrastructure
Noah CIO Office Recommendation: With the rapid pace of technological advancement, humanity is approaching a "technological singularity," the point at which artificial intelligence surpasses human intelligence. The arrival of the singularity will usher in unprecedented technological progress and societal transformation. Super intelligent AI and artificial general intelligence (AGI) will solve many challenges currently faced by humanity. At present, the world has already entered a "new industrial revolution”. A focus on early-stage investments and AI infrastructure in the primary market is recommended.
Validation: The rapid expansion of AI technology across various industries has fueled a growing demand for AI infrastructure. To support this growth, countries such as the U.S., Europe, and Japan have accelerated AI research and infrastructure development through strategic planning and fiscal investments. As of the close on December 13, the Shenwan Hongyuan Global AI Infrastructure Index (802604.WI) rose from 2,825.15 points at the beginning of the year to 4,565.53 points, a remarkable increase of 57.89%.
Trend: The Global AI Infrastructure Index experienced significant growth in 2024.
05. U.S. Dollar Index
Noah CIO Office Recommendation: Considering the macroeconomic conditions and monetary policy of the U.S., and analyzing the characteristics of the four previous upward cycles of the dollar over the past 40 years, this strong dollar cycle is expected to persist. Continued attention is recommended.
Validation: In 2024, the U.S. economy demonstrated strong growth, and market expectations for the pace of Federal Reserve rate cuts shifted due to "Trump Trade" dynamics. The U.S. Dollar Index remained resilient. As of December 16, the U.S. Dollar Index (USDX.FX) rose from 101.37 points at the beginning of the year to 106.98 points, an increase of 5.53%.
Trend: The U.S. Dollar Index remained stronger than market expectations throughout 2024.
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06. Global Fixed-Income Assets
Noah CIO Office Recommendation: Countries currently raising interest rates are likely to follow the Federal Reserve into a rate-cutting cycle, creating a macro "tailwind" for global fixed-income assets.
Validation: In 2024, the Federal Reserve began cutting rates, impacting global risk appetite and capital flows. Bonds in emerging markets such as Asia, with their relatively higher yield expectations, garnered significant attention from investors. As of the close on December 13, the S&P China Bond Index (SPBCNCOTP.SPI) rose from 152.98 points at the beginning of the year to 162.84 points, an increase of 6.41%.
Trend: The Emerging Market Bond Index continued its upward trajectory in 2024.
07. Rental Apartments
Noah CIO Office Recommendation: The real estate sector is highly diverse and requires segmentation. From the perspective of valuation uplift and declining credit costs, the development strategies of mainstream segments like rental apartments are favorable.
Validation: The performance of REITs is driven by the interest rate environment and rate expectations. As the Federal Reserve ended its rate-hiking cycle, REITs began to rise. As of the close on December 13, U.S. Residential REITs (8882387.WI) rose from 2,968.74 points at the beginning of the year to 3,419.2 points, an increase of 14.88%.
Trend: U.S. Residential REITs exhibited an upward trend in 2024.
08. Private Credit Strategies
Noah CIO Office Recommendation: In an environment where interest rates have remained higher for longer than expected, liquidity-focused strategies present attractive short-term allocation opportunities. It is recommended to focus on private direct credit strategies, which provide higher safety through more protective loan agreements, and offer better returns than other fixed-income assets.
Validation: Private credit provided startups with additional financing options while generating low-risk and long-term stable returns for limited partners. For example, the benchmark Cliffwater Direct Lending Index (CDLI) showed a 12-month return of 11.73% as of the end of Q3 2024, highlighting the opportunity of this strategy under relatively high-interest conditions.
Trend: The U.S. CDLI maintained an upward trajectory in 2024.
09. U.S. Stock Market Indices
Noah CIO Office Recommendation: When constructing a global asset portfolio, consider investing in index ETFs such as the Nasdaq 100 and S&P 500.
Validation: The robust earnings of major technology companies like Tesla and Amazon drove the continued rise in U.S. stocks. Notably, MicroStrategy will be included in the Nasdaq 100 on December 23, and the strong performance of cryptocurrency-related stocks further boosted overall market sentiment. As of the close on December 13, the S&P 500 Index (SPX.GI) rose from 4,745.2 points at the beginning of the year to 6,051.9 points, a gain of 26.86%.
Trend: Major U.S. stock indices exhibited strong upward trends in 2024.
10. Hedge Fund Strategies
Noah CIO Office Recommendation: Focus on global hedge fund allocation. For example, through Fund of Funds (FOF) structures, investors can lower the capital threshold and management effort for multi-strategy portfolio investments. Global multi-strategy FOFs leverage professional fund research and selection capabilities to choose top global funds with diverse strategies and styles, dynamically optimizing weights to reduce portfolio volatility and provide relatively stable returns. Pay attention to hedge funds’ ability to generate alpha in volatile markets, particularly cost-effective strategies such as market-neutral and trend-following strategies. These strategies benefit in two key ways:
1. They often hold significant amounts of non-leveraged cash, allowing them to take advantage of higher market interest rates.
2. The short-selling environment has improved significantly. Data shows that for the first time since 2008, short-selling returns have exceeded dividend yields, making equity market-neutral strategies more attractive.
Validation: The global hedge funds highlighted by Noah CIO in 2024 performed exceptionally well, with various strategies achieving strong absolute returns. For example, from January to November, relative value and equity long-short strategies achieved double-digit returns, multi-strategy funds delivered an 8.6% return, and equity market-neutral strategies achieved a 6.8% return, among others.
Trend: Global hedge fund strategies demonstrated outstanding performance in 2024.
