A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.

Family offices are the most bullish they’ve been in years, putting their cash to work in stocks and alternatives as the Fed starts to cut interest rates, according to a new survey.

Nearly all family offices, 97%, expect positive returns this year, and nearly half expect double-digit gains, according to Citi Private Bank’s 2024 Global Family Office Survey.

“This is the most optimistic outlook we’ve seen,” said Hannes Hofmann, head of the family office group at Citi Private Bank, which has been conducting the survey for five years. “What we’re clearly seeing is an increase in risk appetite.”

The survey is the latest sign that family offices — the private investment arms of wealthy families — are emerging from two years of hoarding cash and bracing for recession to start making more aggressive bets on market and valuation growth.

They especially like private equity. Nearly half, 47%, of family offices surveyed say they plan to increase their allocation to direct private equity in the next 12 months, the largest share for any investment category. Only 11% plan to reduce their PE holdings. Private equity funds ranked second, with 41% planning to increase their allocation.

With interest rates heading down, family offices are also regaining their appetite for stocks. More than a third, 39%, of family offices plan to increase their allocation to developed-market equities, mainly the U.S., while only 9% plan to trim their equity exposure. That comes after 43% of family offices increased their exposure to public stocks last year.

Public equities remain their largest holding by major asset class, with stocks making up 28% of their typical portfolio — up from 22% last year, according to the survey.

“Family offices are taking money out of cash, and they’ve put money into public equities, private equity, direct investments and also fixed income,” Hofmann said. “But primarily it’s going into risk-on investing. That is a very significant development.”

Fixed income has become another favorite of family offices, as rates start to decline. Half of family offices surveyed added to their fixed-income exposure last year — the largest of any category — and a third plan to add even more to their fixed-income holdings this year.

With the S&P 500 up nearly 20% so far this year, family offices are looking for 2024 to end with strong returns. Nearly half, 43%, expect returns of more than 10% this year. More than 1 in 10 large family offices — those with over $500 million in assets — are banking on returns of more than 15% this year.

There are risks to their optimism, of course. When asked about their near-term worries about the economy and financial markets, more than half cited the path of interest rates. Relations between the U.S. and China ranked as their second-biggest worry, and market overvaluation ranked third. The survey marked the first time since 2021 that inflation wasn’t the top worry for the family offices surveyed, according to Citi.

One of the big differences that sets family offices apart from other individual investors is their appetite for alternatives. Private equity, venture capital, real estate and hedge funds now account for 40% of the portfolios of the family offices surveyed. That number is likely to keep growing, especially as more family offices make direct investments in private companies.

“It’s a significant allocation that shows family offices are asset allocators who are long-term investors, highly sophisticated and taking a long-term view,” Hofmann said.

One of the biggest themes for their private investments is artificial intelligence. The family offices of Jeff Bezos and Bernard Arnault have both made investments in AI startups, and repeated surveys show AI is the No. 1 investment theme for family offices this year. More than half of family offices surveyed by Citi have exposure to AI in their portfolios through public equities, private equity funds or direct private equity. Another 26% of family offices are considering adding to their AI investments.

Hoffman said AI has already proven to be different from previous investment innovations such as crypto, and environmental, social and governance, or ESG. Only 17% of family offices are invested in digital assets, while a vast majority say they’re not interested.

“AI is a theme that people are interested in and they’re putting real money into it,” Hofmann said. “With crypto people were interested in it, but at best, they put some play money into it. With ESG, we’re finding a lot of people are saying they’re interested in it, but a much smaller percentage of family offices are actually really putting money into it.”