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Mike Elliott discusses how his firm Olympus Ventures thinks about portfolio construction
Key Takeaways
- Mike Elliott of Olympus Ventures, the Schultz family office, discusses their growth-oriented portfolio strategy and advantages family office's have in the investment marketplace.
- Olympus Ventures leverages long-time horizons and lack of liquidity requirements to mitigate risk and achieve above-market returns with private market investments.
- Private credit, venture capital and private equity are particularly exciting asset classes that offer high upside exposure and fit well with a family office's long time horizons.
- Public markets are less exciting, with bonds yielding basically nothing and equity expected returns also at lows.
Transcript
My name is Mike Elliott, and I work at Olympus Ventures, which is a family office for the Schultz family, the founders of Best Buy. I spent eleven years in corporate FP&A at Best Buy. And at the end of those eleven years, I transferred over to the family office.
The primary goals of the portfolios we manage are all growth-oriented. One of the advantages of family office is that you can take the best of what investment professionals have to offer. Compare that to the advantages that the family has in terms of their investment horizon, their liquidity needs or lack thereof, and where they're able to take advantage of their unique situation and apply that to the capital markets to get returns that are either above-market or market returns with less risk, and that's our goal.
We spend a lot of time looking at asset class forecasts in the capital markets and looking at our family's unique attributes and looking for opportunities to exploit returns that are available. That, like I said, might be either market returns with less risk or above-market returns, where we can take advantage of structures or other things that help us achieve those returns. So, for instance, if you look at any current 3, 5, 7-year capital markets forecast for credit or for public equities, those returns are not super exciting. The bond forecast is below mid-single digits. Public equities are maybe single digits, maybe a little higher, depending on what geography you look at.
There's an opportunity to look at structure, for instance, and credit to get returns that are substantially above that. There's also an opportunity in private markets in alternatives, especially in public equity and venture capital, to leverage that time frame. The long time frame that the family has to exceed those returns, usually pretty meaningfully. A long time frame actually can offset the risk if you do not need to take advantage of liquidity. If you don't have liquidity requirements and you can be patient. You can actually just mitigate a lot of risk through time.
Important disclosures
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