January 24, 2023
Dear Investors and Friends,
2022 was an incredibly unusual year for the markets with both stocks and bonds down. Going all the way back to 1976, there was only one other year, 1994, that stocks and bonds were both negative and 2022 is the only year that both were down double digits. So how did RCM do in this challenging year?
Performance of RCM’s Short Duration High Yield Corporate Bond Composite
While we never like reporting that our short duration high yield composite is down, overall, however, we are pleased that in 2022 RCM’s short duration high yield bond composite outperformed the overall bond market by 11.07% and its benchmark by 2.75% exceeding our ongoing objective of beating our target index, after fees, by 200 bps per year.
Two major observations can be made from the above:
- First, RCM continues to allocate unconstrained fixed income investors to the right sector of the fixed income market. Short duration high yield corporate bonds have a track record of significantly outperforming the overall bond market as represented by the Bloomberg Agg.
- Second, RCM’s composite continues to meaningfully outperform its benchmark. RCM has proven and repeatable processes in place that it believes will allow it to consistently to do so over the medium to long term.
Performance of RCM’s Government Backed Liquidity Management Composite
With the backup in interest rates and the request of clients, RCM launched a cash management strategy on September 1, 2022. This strategy seeks the protection of principal and liquidity while maximizing yield given a client’s specific constraints. This strategy invests client funds directly in Treasury Securities in separately managed accounts. As the chart below shows, RCM is pleased that its cash management strategy provided clients with the peace of mind that their cash was not only safe and available when needed but also well invested.
Performance of RCM’s Municipal Bond Composite
We are pleased that in 2022 RCM’s municipal bond composite beat the overall municipal bond market by 7.66% and its benchmark by 3.76%.
How Does RCM Expect to Do in 2023?
Given the repeatable and proven processes RCM has in place, we expect our strategies to continue to meaningfully outperform their benchmarks. While we will discuss our outlook for 2023 in our next letter, the big driver for near-term market performance will be inflation and how sticky it is combined with the economy and whether it enters a recession.
Please reach out to us with questions and comments. Thank you for trusting RCM with your capital. It is a privilege for us to serve you.
David and Mike
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Disclaimer
Roosevelt Capital Management LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
Past performance is not indicative of future performance. Principal value and investment return will fluctuate. No guarantees or assurances that the target returns will be achieved, or objectives will be met are implied. Future returns may differ significantly from past returns due to many different factors. Investments involve risk and the possibility of loss of principal.
While all the values used in this report were obtained from sources believed to be reliable, all calculations that underly numbers shown in this report believed to be accurate, and all assumptions made in this report believed to be reasonable, Roosevelt Capital Management LLC neither represents nor warrants the values, calculations or assumptions and encourages each prospective investor to conduct their own review of the audits, values, calculations and assumptions.