New challenges

Sentry Investments’ new senior portfolio manager, Lieh Wang, reveals the career touchstones that helped shape his investment strategy

New challenges

Lieh Wang

Joining a new company can be a daunting proposition, but for Sentry Investments’ new vice-president and senior portfolio manager, Lieh Wang, the transition has been pretty painless so far.

Having distinguished himself during a seven-year term at Empire Life, where he led the Canadian equity team and later managed the US equity fund, Wang was looking for a fresh start earlier this year when he moved to Sentry. Welcoming him were some familiar faces, including Gaelen Morphet, who made the same leap from Empire Life to Sentry in 2016. For Wang, hitting the ground running with the Sentry Growth and Income Fund was a top priority.

“Fortunately for me, I inherited a portfolio of quality companies,” he says. “So in that respect, I don’t see any major shifts in strategy. My investment philosophy and process are very consistent with the in-house philosophy here at Sentry. Having said that, I will put my own stamp on the portfolio over time.”

Michael Simpson, who manages the company’s flagship Sentry Canadian Income Fund with $6 billion in assets, previously oversaw the Sentry Growth and Income Fund, so Wang has some pretty big shoes to fill. Fortunately, it’s a challenge he relishes. Wang explains his selection process for the fund.

“It is predominantly focused on Canadian stocks, but I have the flexibility to invest in foreign stocks as well,” he says. “There are the Canadian banks, as well as a lot of high-quality industrial companies like CN Rail and MacDonald Dettwiler. It is a well diversified fund – there are some REITs as well. I also try to focus on dividend-growing stocks in Canada and the US, and not just stocks with a high yield.”

Wang started his career with AMI Partners in 1994; in the 23 years since then, he has navigated both the dot-com crash and the financial crisis of 2008. Both were formative periods in his development as a money manager.

“It really hit home that to build wealth over time, it is critical to make sure to protect and preserve capital on the downside,” he says. “Those downturns made me even more conscious of the downside risk in the portfolio. That is what I think about coming into the office every day – not the upside.”

It’s an approach that has served him well over the years and will shape the Sentry Growth and Income Fund going forward. His investment philosophy isn’t rocket science, but it is one that requires a great deal of discipline.

“What we learned from the 2008 crisis is that you can’t invest with emotion,” Wang says. “You would have missed a great buying

opportunity in March of 2009 – equity markets in the US are up over 200% since that time. When stocks are fundamentally cheap, you shake off any emotion, look at your due diligence and then decide to step into a position.”

Industry opinion is split on whether the strong market performance will continue for much longer, but Wang’s investment strategy means being prepared for any downturn that should materialize. In that respect, the current uncertainty doesn’t cause him undue concern.

“I’m not necessarily bearish on the markets, but I did expect more volatility this year, given the geopolitical issues out there,” he says. “We haven’t seen that so far, and the markets continue to grind higher. The North American economy continues to be positive. It’s not growing gangbusters by any stretch of the imagination, but we are continuing to see some decent growth prospects.”

That said, the only inevitability of a bull market is that eventually it will end. Wang doesn’t worry about forecasting what might be coming. He deals in facts – strong fundamentals and proven quality. In doing so, he protects the interests of any investor using his funds.

“We are in the eighth year of the recovery now, and we could continue to grind higher, but the easy money has clearly been made,” he says. “I’m being vigilant to see if there is downside, but what I have learned in over  two decades in the industry is that it is very difficult, almost impossible, to time the markets. So if I invest in a basket of high-quality companies and I’m comfortable where the downside is, the upside should take care of itself.”

In addition to managing the Sentry Growth and Income Fund, Wang also over­sees  an options portfolio as part of the Sentry Alternative Asset Income Fund. Previously, the fund was comprised of three different sleeves: high yield, REITs and global infra­structure stocks. After hiring Wang, Sentry decided to add a fourth sleeve – options – based on his expertise.

“Options don’t have to be complex,” Wang says. “I sell options premiums to manufacture a different income stream on a consistent basis. I am, in effect, collecting income by selling insurance to investors who are bearish on a stock or selling further upside potential to investors who are bullish on a stock. By regularly harvesting this premium as income, it both adds to returns and acts to dampen the portfolio’s volatility during rough patches in the market.”

The fund offers an alternative strategy that Wang believes will be attractive to investors searching for diversification and alternative income in this low-rate environment. Managing the fund with him are Gaelen Morphet, James Dutkiewicz, Andy Nasr, Michael Missaghie and Gajan Kulasingam – a talent pool that suggests the company has high hopes for the fund’s success.

“You are getting a product that is not as correlated to the overall equity markets or bond markets,” Wang says. “By introducing options into this product, you introduce an element that will diversify the portfolio and enhance the yield even more.”