2015 Investment Review

Investment results are in for the 2015 calendar year and I want to take a few minutes to update you on the performance of our portfolios, and look forward to the year ahead.

First, I want to take a moment to thank you. During 2015, Precedent Asset Management continued to grow in terms of the people on our team, the clients we serve, and portfolio assets — which increased nearly 18%. I am grateful for the families and institutions that have placed their trust and confidence in our work.

As always, it has been a busy start to the new year — a byproduct of renewed attention to financial matters by many as a new year begins. If you haven’t already, I encourage you to schedule a financial planning review meeting with me for the coming months by visiting https://precedentam.com/schedule/. These meetings are a great opportunity to check progress toward your goals and set an agenda of planning work for the rest of the year.

2015 Asset Class Returns

2015 proved to be another challenging year for global markets. After a modestly low return in 2014 of 4.16%, U.S and global stocks (ACWI) fell in 2015, with a negative return of -2.39%.

I recently published a full summary of the returns for primary asset classes in 2015, which you can review here: https://precedentam.com/investing/2015-asset-class-returns/. The range of returns for the year was +2.99% to -33.47% across these assets.

Precedent AM Portfolios

For the year ending 2015, net of all portfolio expenses and fees, our primary Precedent AM portfolio strategies continued to solidly outperform their respective benchmarks. Importantly, our returns were essentially flat in a year where most assets did poorly, and remain well ahead of target benchmark returns since our inception in 2013.

Precedent AM Strategy
(Firm Composite of all accounts)
Net Return
Since Inception
Growth Composite -0.53% 3.81%
Blended Index
(70/30 ACWI/US AGG)
-1.40% 2.06% 
Moderate Composite 0.18% 3.51%
Blended Index
(50/50 ACWI/US AGG)
-0.86% 2.27% 
Conservative Composite 0.21% 3.32%
Blended Index
(30/50/20 ACWI/US AGG/1-3 YR TREAS)
-0.34% 2.00% 

The quarterly performance reports that are being mailed out this week will provide the calculated return for each of your specific accounts and unique strategies.

Looking Ahead

2016 has kicked off with a steep decline in U.S. and global stocks, wiping out two years of total returns in just a few weeks. The MSCI All-Country World Index (ACWI) total return is down nearly 18% from the high on May 21st, 2015. At the same time, conservative asset classes such as U.S. Treasuries and core fixed income have risen — providing strong downside protection in our strategies.

The major decision points of our investment approach have remained consistent — long-term historical valuation levels, relative asset class valuation, credit leveraging/deleveraging cycles, and market sentiment and momentum.  Following these, we are continuing to shift asset allocations to the areas with the greatest potential for future growth while carefully preserving our margin of safety to prevent significant drawdowns.

If the market volatility continues as it has recently, I will be sure to keep you updated on our assessment of the opportunities being created and the impact on the portfolios we manage.

Thank you for the opportunity to serve you and your family or organization!