SAN ANTONIO BUSINESS JOURNAL – Todd Brockwell is president of 1900 Wealth, San Antonio-based Jefferson Bank’s wealth management arm.
For Todd Brockwell, 2022 ended with an indelible mark, summed up in two words: interest rates.
“I want to be clear, everybody got hit on this. If they didn’t, they’re lucky, because they were sitting on pure cash,” he said.
When the Federal Reserve began increasing the cost of borrowing money last June, Brockwell and his team at 1900 Wealth — Jefferson Bank’s wealth management arm — said the firm needed to get defensive.
“We shortened the duration in our fixed-income portfolio,” Brockwell said.
Rather than investing in longer-term bonds, Brockwell and his team pivoted to short-term securities from the U.S. Treasury.
“We keep it short: three months, six months. Even one month,” he said. The team needed to find a way to beat the market in the immediate short-term to generate positive returns for their clients when markets were dipping.
Despite the challenges posed by 2022, Brockwell said the firm added close to $200 million in accounts by buying treasuries.
“This is a temporary tactical position, not a long-term strategy. When they pull back the interest on the Fed rate —- and we don’t know when that’s going to happen — then we’ll move away from this Treasury program.”
Another strategy involved the use of private credit funds.
“Instead of buying a bond, we hired managers we had a good relationship with who loaned to small and middle-market businesses,” Brockwell explained. “They’ve never lost a dollar [and] shown positive returns every single month since inception.”
The firm is currently plotting an expansion into the Boerne and Austin markets and is also looking to make new hires in the first half of 2023 to continue to support its growth.