Hart Capital Management Inc. has focused on protecting its clients' assets through two economic downturns and is back on a growth track this year, says Craig Hart, the 11-year-old asset management company's president and chief investment officer.

The company is seeing solid growth in the amount of assets it manages for others, as well as in new clients, Hart says.

"We're not afraid to move assets and cash around," he says. "Because of our financial flexibility we're poised to continue to grow."

Despite two recessions this decade, Hart says the company has been able to protect assets over the long run.

"This decade had the two worst bear markets since the 1920s," he says. "We performed very well over the 10-year period. Clients haven't lost money if they were with us 10 years ago."

Last year was a painful year, though, Hart says.

"We all suffered a pay cut last year," he says. "Our only fees are based on assets of the clients. If the assets go down, our pay goes down."

Protecting assets in a bear market is as important as making money in a bull market, Hart says.

Hart Capital Management employs seven people and occupies 3,000 square feet of space on the 12th floor of the former Washington Mutual Financial Center, at 601 W. Main. It expanded its space by 1,000 square feet last year to make room for more offices and to add a meeting and conference room outfitted with state-of-the-art presentation technology, including a 6-foot flat-panel, wall-mounted monitor.

"We have clients all over the region. We can communicate via Webcast and have presentations available both in video and audio," he says. "All clients can participate in conference calls. It's not razzle-dazzle. It's effective use of technology."

Hart Capital Management's investment decisions are made in Spokane, Hart says.

"We do our own analysis here, and we don't have a sales force," he says.

Hart says he doesn't believe in investing in mutual funds that mirror large stock indexes, such as the Standard & Poor's 500.

The company, however, does track and market what it calls the Hart Composite, which is an index of 15 select Inland Northwest companies, including natural-resource companies, financial institutions, manufacturers, and health-care service providers. Hart says that composite generally has performed better since Hart established it in 2002 than the S&P 500 has.

Most of the company research focuses on individual stocks and bonds, he says.

"The key to successful investing is knowing what you own," Hart says. "We are tactical in nature and we will move assets."

As of Sept. 30, the market capitalization of companies in the Hart Composite totaled $9.2 billion. If the Inland Northwest were its own country, it would rank 41st in the world—just above Cyprus—in terms of market capitalization just from the companies on the Hart Composite, he says.

Hart Capital Management also formed one of the state's first hedge funds, Hart says. The company dissolved the fund at a profit in 2003, and Hart Capital Management now is dedicated solely to individual managed accounts, he says.

Hart grew up in Spokane and attended Gonzaga Preparatory School. He earned a bachelor's degree in business administration at the University of Washington, then worked eight years in Seattle as a securities analyst with Shearer/American Express Inc.

He returned to Spokane in 1990 to join Hart & Associates Inc., a commission-based investment brokerage founded by his father, Donald W. Hart. In 1998, he launched Hart Capital Management, a fee-based independent company.

"I wanted a different structure for operating with clients," he says. "I didn't like getting paid on commission. I was an early adopter of a wave toward independence."

Hart and two other financial analysts at the company are certified by the Chartered Financial Analyst Institute. While Hart is the chief investment officer, one analyst specializes in equity investments, and the other, who joined Hart Capital Management last year, specializes in fixed-income assets.

An attorney on staff specializes in financial and estate planning, he adds.

Hart Capital Management has about 200 clients with an average account value of close to $1 million, and the client list is growing at a deliberate pace, Hart says.

"The core of our operations is management of assets for regional higher-net-worth clients, pension funds, and profit-sharing plans," he says.

Its clients mostly are based in the Spokane area, although some are scattered geographically from Seattle to Western Montana, Hart says, and growth in its client base largely is due to referrals from other clients, accountants, and lawyers.

"Our philosophy is to have a finite base of clients and serve them well," he says.

The company's annual fees are set on a sliding scale topping out at 1.25 percent of assets for accounts with a value under $500,000. At the other end of the scale, Hart Capital Management charges 0.5 percent for accounts valued at more than $5 million.

No one in the company is assigned specific clients, Hart says.

"We all work together on behalf of each and every client," he says.

Citing the climb of the stock market since the second quarter, and some expert assertions that the recession is over, Hart says he expects the economic expansion to resume in the near future.

"The stock market moved in advance of the economic turn and moved substantially since then," he says. "Rarely does expansion only last a quarter or two."