September 28, 2020
When Strategy Drives Growth
Announcing a new silver lining for 2020

If there’s one thing 2020 has proven to us all, it’s that life can be full of surprises. In the face of the pandemic, most of those surprises have been unwelcome. Yet through it all, I see people everywhere finding silver linings during these strange times. Reconnecting with family and friends on Zoom. Rediscovering a slower, more balanced lifestyle. Perfecting home-baked bread. Here at Leisure Capital Management, we have another silver lining to add to the list: we recently surpassed $500M in Assets Under Management (AUM).

Our ability to achieve that milestone amid a global pandemic may be unexpected for anyone who isn’t familiar with our firm. But for those who know our team, understand our philosophy, and have benefitted from the steps we take to preserve and protect our clients’ wealth, the fact that we’ve reached new heights at such an unusual time may come as no surprise at all.

Much of our recent growth, of course, is due to the individual financial successes of our clients. A long list of highly profitable activities, including sales of closely held businesses, real estate transactions, and a number of sizable estate settlements, has bolstered the amount of assets we manage today. Another significant driver of growth has been our approach to protecting our clients’ investment portfolios. As Marr articulated so well in his article In the beginning…, from the day we founded the firm, our goals have been to invest wisely to increase the wealth within our portfolios, and to balance a desire for growth with “decisions that we felt confident would help protect the nest eggs of our clients.” During 2020, as many asset management firms have seen marked losses across their portfolios, that balanced approach has proven its worth. In particular, two aspects of our investment strategy have provided much-needed resiliency and downside protection: our fixed income and multi-strategy portfolios. Here’s a quick look at each of these to shed some light on why they worked so well against the backdrop of the 2020 market environment:

  • Fixed Income
    When interest rates are low for long periods of time, financial analysts and journalists often talk about the struggle of “hunting for yield.” Because finding yield—or earnings on investments—in a sustained low-interest environment is no easy task, many investors feel forced to move into higher-risk assets in order to generate return. But this strategy puts the safety of the entire portfolio at risk. Because we strive to protect our assets carefully, we have approached the low-interest environment differently. Instead of shifting into higher-risk investments, over the past several years, we have made moves to reduce the credit exposure within our fixed-income portfolios, carefully balancing credit risk with interest rate This type of activity, combined with our general bias against taking undercompensated risk, has supported our portfolios tremendously.

  • Multi-Strategy
    Spearheaded by Patrick Maxwell, our resident Chartered Alternative Investment Analyst (CAIA) charter holder, our innovative multi-strategy portfolio has been effective at hedging potential market losses by adding liquid alternatives to the portfolio mix. These are investment vehicles that, by their nature, do not typically correlate with stock and bond investments within the portfolio. In other words, when stocks and/or bonds are moving downward, these liquid alternatives tend to either dampen losses or even move in the opposite direction. This can help balance losses with much-needed gains during a down market. 

    Because non-correlated assets don’t move in opposite directions 100% of the time, our multi-strategy portfolio includes multiple strategies that perform independently of equity and bond markets. These include two Managed Futures strategies that are designed to allow investors to ‘have your cake and eat it too’ by participating in the market upside, while also profiting from the downside by selling short. Interestingly, Managed Futures fell out of favor with many investors in the years following the financial crisis. However, we’ve been able to benefit from the diversification benefits and differentiation of Managed Futures by carefully choosing our exposure, leading to some of the best results in the space in recent years.

Clearly, our investment strategy is vital to growing your portfolio, and every financial transaction that delivers a profit helps strengthen our asset levels. But there is a third driving factor that, though less tangible, is no less important in fueling our growth. That driver is people.

The people in our firm, of course, are our pride and joy. We would not be where we are today without the strength of our team. And our amazing clients—the people that make up the Leisure client family—continue to contribute to our success in so many ways. Your personal convictions about the power of the capital markets and the need to apply a holistic, tax-aware approach to investing make it possible for us to stay invested through every market cycle. Rather than chasing riches, you believe, as we do, that the key to long-term financial success is discipline. Your dedication, commitment, and belief in how our team thinks and what we do has put us where we are today. And your many referrals from family, friends, and colleagues have given us new opportunities to help more people to build their legacies.

For some firms, hitting $500M in Assets Under Management is an end mark of sorts. At Leisure Capital Management, I assure you it is just the beginning. In so many ways, 2020 has been an incredibly challenging year, but the silver linings abound. We are thrilled to have such good news to share with you. We’re proud of what we’ve achieved, and we wouldn’t be here without you.

From all of us, thank you.

Pictured: the team at Leisure Capital sharing a virtual toast for our important milestone.

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