How does one preserve capital against this backdrop of rising interest rates and easy credit? By choosing disciplined managers with a track record of providing returns in a rising interest rate environment.
After the financial crisis in 2008, we redirected our expertise from large institutions to high net worth families. While supervising these families’ assets, we took very little interest rate risk and instead generated attractive returns by finding what we call asymmetrical yield.
Investing is akin to treasure hunting for us. We look for opportunities where the upside potential has been ignored, with a strong bias towards structuring and diligent credit analysis.
Our team averages over 20 years of experience advising some of the world’s wealthiest clients by structuring, trading and managing tens of billions worth of deals.
Since the turn of the century, bonds have outperformed stocks by more than double…and with significantly less risk.
In fact, since the Barclays Aggregate Bond Index was created in 1976, there have only been 5 years where bonds generated a negative return (-3% in 1994, -1% in 1999, -2% in 2013, -2% in 2021, -13% in 2022). Accordingly, we feel that most investors should consider allocations to fixed income assets in the 40 – 75% range depending on risk tolerances.
In today’s low interest rate environment, we focus on managing interest rate risk, often by hedging or investing in floating rate bonds. Lastly, instead of “reaching” for additional yield by investing in longer maturity bonds, we prefer to remain conservative, optimize relative value across the yield curve, and then supplement lower conservative yields with a modest allocation to opportunistic investments.
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