Gilbert Garcia, Managing Partner, Garcia Hamilton & Associates LP

Invest: sat down with Gilbert Garcia, managing partner of Garcia Hamilton & Associates L.P., to discuss the firm’s growth as it approaches $25 billion in assets under management, why Houston remains a strategic base for institutional money management, and how the team is positioning client portfolios for volatility. “We strive to outhustle, outwork, and outthink larger firms, and to deliver market outperformance and superior client service, especially when markets are challenging and clients need instant liquidity,” Garcia added.

How would you describe Garcia Hamilton’s position as you approach the $25 billion milestone, and what has driven that growth?

When I arrived in January 2002, we had $200 million in assets under management. When I became a partner in 2006, we were at $600 million. In 2008, when I became the managing partner, we were at $800 million, and we crossed $1 billion in 2009. We crossed $15 billion in assets right before COVID, and now we are at a high-water mark near $25 billion. We are also at a high-water mark in employees, with 38 team members.

We are well-positioned for continued growth with 16 partners, who own 100% of the firm. We have no outside partners and no outside investors. This gives us great flexibility to reinvest in the firm and to make better long-term business decisions for our clients and our employees.

I attribute much of our success to alignment and culture. Because we are employee-owned and because of our compensation structure, team members have skin in the game. We support our team members so they can work efficiently by investing in internal training, new software, changing technology, and broad infrastructure. Managing assets can be challenging; thus, we strive to create a fun environment. We also encourage public service through nonprofit and civic involvement, as many of our partners serve on various boards and commissions. 

We look to develop the next generation of underserved talent for leadership positions. We have over 20 interns every summer working on our trading floor and learning all aspects of the business. In Houston, we recognize what it means to be a privately held fixed-income firm of our size, particularly as an MWBE firm (Minority and Women-Owned Business Enterprise). We feel a corporate responsibility and moral obligation to help open doors for new firms that are trying to reach critical mass and to play a leadership role in that regard beyond Houston.

What is making Houston thrive, and why is it a strong place for a firm like Garcia Hamilton to be headquartered?

If you were building a financial firm from scratch, you would want to be centrally located so you could do business with both the East Coast and the West Coast. You would also want global connectivity, and Houston’s airports create a gateway across the United States and the world. Add in Texas’ climate and cost advantages, and it becomes easier to recruit, retain people, and build a successful long-term culture in Houston.

The city’s diversity is key, too. Houston brings many communities, cultures, and perspectives into one place. And while New York and Chicago may be the financial capitals of the world, talent is everywhere. We recruit locally because culture, attitude, and work ethic are important attributes, and Houston and Texas have strong universities and deep talent pools.

With elevated interest rates and ongoing uncertainty, how are you seeing institutional investors make decisions, and how are you thinking about fixed income?

There is always a place in asset allocation for fixed income, especially for institutional clients. High-quality fixed income serves as an anchor so clients can take risks elsewhere. It throws off cash flows that help institutions pay bills, meet benefit payments, and stay liquid during stressful markets.

Our job is to provide liquidity for clients at all times, including during difficult periods like the Great Financial Crisis and COVID. In our view, the current economic environment is weak, and we believe the Federal Reserve is making a policy mistake by raising short-term interest rates. We expect yields to decline significantly over the next 12-18 months. 

Where are you finding attractive opportunities right now, and where are you being more cautious?

We are positioning clients’ portfolios to be protective and defensive. That means an emphasis on the highest quality securities, primarily U.S. Treasuries and agency government mortgage-backed securities.

We are keeping allocations to corporate bonds small because they are significantly overvalued today. We avoid leverage and derivatives, and focus on highly liquid securities. 

There is continued consolidation in asset management. How are you positioning the firm to compete with larger national players?

We welcome competition. We plan to outhustle, outwork, and outthink larger firms. We focus on delivering market outperformance and superior client service. 

A big differentiator is accessibility. Many large firms are leaning heavily into AI and displacing workers. We are leaning into the human touch. Clients want to pick up the phone and talk to decision-makers, including senior leadership and portfolio managers.

We also want to build homegrown talent rather than outsource jobs. We think a team environment, a positive culture, and community engagement ultimately benefit our clients.

How are you attracting, retaining, and developing top talent to deliver relationship-based service?

As a money manager, we do not have hard assets like inventory or heavy equipment. Our assets are our people, and they ride in the elevator every day. We look for employees who are hungry, who have great attitudes, and who believe in something bigger than themselves.

Many of our employees and partners are first-generation college graduates, and they possess exceptional drive and a strong work ethic. We also work to create a family-friendly environment where people are compensated well, supported, and able to grow.

Looking ahead, what are your top priorities for the next three to five years, and how will you define success?

First, we have to deliver market outperformance for clients in any environment. Second, we have to maintain superior, hands-on client service. Third, we prioritize accessibility so clients know they can reach senior management at any time.

We also want to be a beacon for other MWBE firms. Being a leading privately held bond firm in Texas and a top money manager in Houston comes with certain expectations and responsibilities. We want to live up to them by developing the next generation of business leaders and by keeping doors open for new firms that will come after us.

Ultimately, we define success by the environment inside the firm. If employees are happy and can build long careers here, our clients will benefit. We have team members who have been here over 20 years and longer. I am in my 24th year, and I love what I do. If you take care of employees, everything works out for the clients in the end.