Fidelis Capital, a Tampa-based RIA with $2.3 billion AUM, was founded by private banking veterans. Managing equity and fixed-income allocations in-house to cut costs for clients. Serves institutions, non-profits, and family offices, with individual clients being multigenerational families worth $15-30 million.
Average relationship is $15-30 million, with some over $100 million. Clients typically multi-generational with complex assets. Fidelis manages fixed-income and equity assets in-house for net of fees, taxes, and inflation returns. Focus on tax-aware fixed-income strategy and tax loss harvesting for clients.
Fidelis targets benchmark returns for fixed-income and equity. In fixed-income, tracks appropriate benchmarks for clients and includes taxable bonds when needed. Equity management done in-house with direct indexing and tax loss harvesting. Strategies tailored to client preferences, such as growth or relative to benchmark. Michael Malloy, Chief Investment Officer, discusses strategies for selecting names for investment, emphasizing quantitative research to outperform benchmarks without additional fees. His firm invests in private markets, including real estate, debt, equity, and infrastructure, with an increasing focus on evergreen funds alongside drawdown funds.
Private markets play a significant role for clients seeking long-term capital growth. Malloy’s firm allocates about 6% to real estate, complementing clients’ existing holdings. They offer a mix of drawdown and evergreen funds, tailoring portfolios to individual client needs, with allocations ranging from 10% to 50%.
For clients interested in private markets, Malloy’s firm carefully considers suitability and discusses the illiquidity and risks involved, starting with evergreen funds for immediate exposure. They also subadvise a private equity drawdown fund to provide efficient access to illiquid assets, aiming to enhance client experiences with transparency and updates.
While Malloy’s firm typically manages fixed income and equity in-house, they may use third-party managers for mid/small-cap and international/emerging market investments. High-yield fixed income is typically managed through mutual funds. Client preferences for specific managers are honored, with a focus on maximizing returns by minimizing fees.
When selecting asset managers for private markets, Malloy values long-term relationships and innovative, cost-effective fund families. The firm emphasizes a combination of drawdown and evergreen funds to provide diverse exposure for clients. Long-term compounding and multi-generational wealth preservation are key considerations in their investment approach. Families used to prefer small boutique strategies, but now they are leaning towards big, established firms like Blackstone. Investment committee meets weekly to discuss outlook and allocations. They rebalance quarterly but make adjustments during market volatility. Clients can invest in cryptocurrencies through ETFs, closed-end funds, or holding assets with custodian Fidelity.
International markets are not a top priority for the firm, with only 15-20% international exposure compared to domestic. They lean towards emerging markets, the Pacific Basin, and South America. Cash holdings are minimal, ranging from 1-3% in managed accounts. Some clients prefer larger cash holdings for flexibility and opportunistic investing.
Read more at Yahoo Finance: Focusing on Returns Net of Fees, Taxes and Inflation