Digitally Native Modern Wealth management solution with Kyrill Asatur

Kyrill Asatur Kyrill is the CEO of Center Fin, a digitally native, institutional quality wealth management service. Originally an immigrant from the former Soviet Union, Kyrill began his career at Goldman Sachs. During his eight years there, he spent most of his time working with hedge funds in the prime brokerage business.

In 2009, Kyrill moved to the buy-side, joining a distressed credit hedge fund founded by two ex-Goldman prop traders. He then worked at two other firms, most recently Golub Capital.

With two decades of experience working with sophisticated institutional investors, Kyrill was always frustrated with the lack of access to similar quality investment solutions for him and others in his network. He founded Centerfin to solve this problem, providing a holistic approach to managing wealth in a manner modeled after other long-term-oriented investors such as endowments and family offices.

Episode Highlights Here:

Kyrill:

So that’s what we did coming into 2022. And now, in the first quarter, that looked great because we saw inflation, we saw, you know, the Federal Reserve raising interest rates, fixed income assets had kind of, you know, I think one of their worst starts ever.

Pierce:

Now, you guys are saying, you know, well, duh, like, the smart people saw this coming from a mile away and didn’t buy any of that, any of that, you know, fluff that they were throwing at us, and, and realized holy crap, like, you pump your pumps, you know, half the GDP in two years into the economy, things are gonna go bananas, and, and so and so you guys started strategizing against that, or how are you like handling that?

Kyrill:

Yeah, that’s exactly right. So so, we were kind of discussing this internally in the kind of second half of last year. And when we started to come, it kind of became, you know, as time went on, it became clearer and more evident that it’s very potent, you know, probably, inflation was not going to be transitory, and it was going to become a little bit more entrenched. And in that case, the Federal Reserve, given they have a dual mandate, right, maximum employment, which has been very low for, you know, a decent amount of time now, and then price stability, which is inflation, while they would have the Federal Reserve would have no choice but to act to tame inflation. And the way they only think the Federal Reserve can do that, to do that is to raise interest rates, right? And so the obvious thing to do, the most obvious thing to do, if that were to happen, so we are going from, you know, just to use the 10 years US government bond as a proxy, because that’s the one that’s mainly used. So that was trading last year, it’s kind of between, you know, 1.3 and 1.5%. And if they were to raise interest rates, you know, significantly, that was gonna go significantly higher, that would mean that the level, the market value of fixed income assets, were gonna have to come down, right? And so since most portfolios are structured, and we’re not an exception, we have stocks, bonds, and other things, but, but since most portfolios have stocks and bonds, then you were going to see the most prominent kind of thing to do was to cut your fixed income exposure. And that’s what we did, coming into 2022, as a way of kind of getting out of the way of that interest rate hike that we expected from the Federal Reserve. And we also rotated into things that we felt would benefit from an inflationary environment that was more sticky than transitory, like commodities, right? Commodities are kind of prominent place that benefits from inflation. And so that’s what we did coming into 2022. And now, in the first quarter, that looked great because we saw inflation, we saw, you know, the Federal Reserve raising interest rates, fixed income assets had kind of, you know, I think one of their worst starts ever, but equities had some volatility as well, but we had, you know, the commodities to offset some of that volatility in the equity side of the of client portfolios. Second quarter, and, as I mentioned, this, I was just writing our letter for the second quarter, the second quarter, everything, everything was was down, as we introduced a new element into the, into the kind of narrative in the conversation, which is a recession, right. And so, towards the end of the second quarter, the economic data started to come in relatively weak and show clear signs of slowing in the economy. And hence, all of the very cyclical things like commodities rolled over also. So then you had stocks go down, bonds go down, and commodities go down in the second quarter. So it’s been kind of a brutal start to the year, the worst start for stocks and 50 years, you know, the worst start for, you know, I think, most asset classes in a very long period of time.

Pierce:

So let me ask you this. I mean, they pumped, you know, the problem seems to be that they pumped all of this money into the economy, right? And now that flow of money is slowing, right? Because that, that, that money, that velocity of turnover, and money is slowing down. And so, like, but where did it all go?

Kyrill:

Right? Like, yeah,

Pierce:

just go to Jeff, like, that’s that, like, hit Amazon or what?

Kyrill:

No, no, I mean, it did go; it flows ultimately into asset prices, right? And that’s why, as I was saying, Before, you saw, you know, the price of real estate, the price of stocks, the price of crypto, the price of tangible assets, like, you know, obviously, housing, commodities, everything went up. And what happens is, you know, it goes into kind of the stuff that is most obvious first, and then it starts to seep into this more speculative stuff. So that’s why you saw, you know, crypto and biotechnology and high growth technology, those are the things that had the craziest, you know, price performance right now But what happens to your point when that reverses, which is what started, you know, at the beginning of this year, that stuff comes down to harvest as well. Right? And we started to see signs of that in early 2021. If you look at very speculative high-growth technology stocks and biotechnology stocks, they peaked in February 2021. So they’ve been in a downtrend for, you know, going on 18 months at this point. So, crypto evaporated $2 trillion of value, and of course, so

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About Kyrill Asatur

Kyrill Asatur Kyrill is the CEO of Center fin, a digitally native, institutional quality wealth management service. Originally an immigrant from the former Soviet Union, Kyrill began his career at Goldman Sachs. During his eight years there, he spent most of his time working with hedge funds in the prime brokerage business.

In 2009, Kyrill moved to the buy-side, joining a distressed credit hedge fund founded by two ex-Goldman prop traders. He then worked at two other firms, most recently Golub Capital.

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