As chief investment officer at Elevage Partners, Thierry Hasse is responsible for leading the firm’s investment committee and managing its client portfolios. He brings with him over 35 years of experience across a wide range of financial roles, spending time at hedge funds and investment banks before ultimately finding his way to Elevage.
Fundamentally, Thierry’s role is to assess the risk/return profiles of his investments and ensure that they align with the goals of Elevage’s diverse client base. No two clients are exactly alike, so their portfolios shouldn’t be either. He describes his job as “part art, part science” because of the different skill sets that are required.
The “art” comes into play when helping a client solve for their WHY — what are their needs, goals, and risk tolerance? How should their investments fit into their broader financial plan? The “science” begins once the WHY has been established. This is where Thierry utilizes his mastery of different financial instruments to strike a reasonable balance between risk and reward.
In the interest of helping you get to know Thierry and understand what he does for us at Elevage Partners, here are some of Thierry’s meditations on his personal journey and investment philosophy.
“Investing isn’t a charitable endeavor; it’s about earning a return on capital”
Thierry characterizes himself as “a value investor with a relatively low risk tolerance.” He always tries to understand the risk and return that are inherent in his investments so that he can make objective decisions for his clients, with the ultimate goal that the capital he invests is likely to be returned.
This often leads him to steer clear of highly speculative investments, like crypto, some tech stocks, and businesses that are in their early stages. He believes in the American economy, maintaining that U.S. businesses better encapsulate the “spirit of entrepreneurialism” and deliver better performance to those of other economies over any extended period.
Thierry is “agnostic” in the way he views potential holdings, meaning that he’s not going to compromise on his goal of seeking a return on his clients’ capital for the sake of philosophy or sentiment. He won’t allow his process to be influenced by hype, or whatever happens to be trending at any particular point in time. Instead, he leans on his ability to assess the viability of an investment by looking at the relevant business fundamentals and making a determination based on the risk/return tradeoff that they present.
Reflecting back on his three-plus decades in the financial world, Thierry jokes, “you always have too few of the good trades and too many of the bad ones,” but all in all, he’s learned to become more conservative in his investment approach, having developed a greater appreciation for investing toward long-term goals over seeking short-term gains.
“We’re keeping an eye on your WHY”
Even in addressing his own attitudes about investing, Thierry acknowledges that the investing process isn’t a one size fits all endeavor — investment strategies must be aligned with the goals of each client and colored by their unique appetite for risk.
An effective strategy must also take into account the individual circumstances of each client, such as their age, career stage, and amount of investable wealth, “you don’t invest for someone who’s 30 in the same way you invest for someone who’s 75.” These ages correspond to vastly different life stages, and thus, vastly different investing goals. An investor in their thirties might be looking to buy a home or start saving for their child’s college education, whereas an investor in their seventies likely wants to minimize the risks to the accounts funding their retirement.
Is the client a casual market participant or an accredited investor? Clients above a certain wealth threshold may have access to investment options that others don’t. These are important distinctions to make when it comes to constructing a client’s portfolio.
Different goals and circumstances call for different approaches to investing, and that’s where Thierry is really able to bring his expertise and extensive market knowledge to bear for Elevage’s clients.
“Risk tolerance is only discovered under fire”
Risk is the most overlooked aspect of investment management, according to Thierry, and it’s often the trickiest thing for an advisor to ascertain. This is because the client doesn’t usually know what their risk tolerance is. They might initially identify as risk-averse or risk-tolerant, but these classifications don’t tend to hold up in the face of market fluctuations, let alone the type of volatility we’re seeing today.
Part of working alongside an Elevage client to construct a portfolio is running simulations that illustrate how that portfolio might perform over different time horizons and in different market conditions. What will the client’s portfolio look like in three, five, or 10 years? What could it look like in a bull market? What about if the market takes a nosedive?
Thierry and his team rarely receive any pushback at this stage in the process. Clients don’t tend to flinch at short-term dips because they see their portfolios growing over the long term. But the lived experience differs quite a bit from the simulation. As it turns out, it’s far easier for clients to stomach losses in a simulated environment than it is to watch them play out in their own investment accounts. This is when one’s true risk tolerance tends to crystallize.
“It’s a bit like what Mike Tyson said, ‘everybody has a plan until they get punched in the mouth.’ Every investor wants to make a ton of money on the stock market and exercise patience but it’s not until the losses start coming in that your real risk tolerance reveals itself.”
Once the client’s risk tolerance is established, Thierry and his team can go to work aligning each client’s investment strategy with their unique risk/return profile while also accounting for their individual goals and circumstances.
“The fun part”
For Thierry, the most enjoyable part of the job is the problem solving that goes into considering a client’s needs and helping them construct a successful investment strategy. It’s about “finding the sweet spot between what the client really wants and what they’re willing to tolerate in terms of risk.” He likens it to solving a puzzle, where the pieces each represent different assets and he has to find a way for them to fit within the bounds of the client’s goals and risk tolerance.
Investment needs vary considerably from client to client, and while everyone who invests is seeking financial growth, the way that growth looks can change depending on when the client has cash needs. Some investors have significant expenses on the horizon—buying a home or having a child, for instance—that they need to save for. In this case, the task for Thierry and his team is to select investments that are likely to deliver a return that arrives at a particular time. Retirees, on the other hand, may be focused on securing a steady stream of income to live off. Here, Thierry needs to select investments that provide dividends or interest at a consistent rate.
In both cases, the challenge for Thierry and his team is achieving the right mixture of assets to fulfill the client’s needs, and it’s one that he embraces wholeheartedly. Thierry isn’t just a stock-picker — his interest is in ensuring the financial wellness of his clients, which requires a comprehensive and personalized approach.
Thierry’s message regarding the state of the economy
To say the markets have been turbulent lately would be an understatement. The effects of volatility and decades-high inflation continue to be felt by consumers and investors alike. Rising interest rates and a second consecutive quarter of negative GDP growth have stoked recession fears. If today’s market conditions have you concerned, just remember that what we’re experiencing is a natural phase of the economic cycle and it will pass.
“There are corrections, there are drawdowns, and they happen every three to four years. They can be nasty at times, but we really feel that the darkest hour is just before the dawn.”
Thierry’s message is to be patient and keep holding on. When the markets eventually rebound, those who exercised discipline will come out the other side better positioned than those who reacted emotionally.
If this is indeed a recession we’re facing, Thierry points to low unemployment and a healthy job market as indicators that it shouldn’t be as difficult to endure as some previously envisioned. No one will be entirely spared from market volatility and stock decline in the wake of widespread selloffs, but Thierry and his team are taking steps to insulate their clients from the worst of these conditions. By investing in shorter-maturity bonds and the highest-quality businesses, Thierry’s objective is to capitalize on climbing interest rates while maintaining flexibility moving forward. The markets are sure to fluctuate, but don’t let short-term movements cause you to lose faith in your long-term plan.
Your friends at Elevage Partners are here to support and encourage you through these difficult times. Use us as a resource and don’t be afraid to leverage our expertise in the pursuit of your financial goals.
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