Making investments at the core

Ronald Chui of CIBC Wood Gundy has navigated the stormy economic seas in Western Canada better than most. He explains his dedicated strategy for safeguarding his clients’ wealth

Ronald Chui of CIBC Wood Gundy has navigated the stormy economic seas in Western Canada better than most. He explains his dedicated strategy for safeguarding his clients’ wealth

BASED IN Calgary, Ronald Chui has witnessed firsthand how the plummeting price of oil has laid the city low over the past year. Cowtown, like most of Alberta, is dominated by energy, with all the associ­ated highs and lows that are intrinsic to that industry. Although his exposure to oil was non-existent until very recently, the fact that his home base is in Calgary means Chui’s business has become more personal.

“If my clients have experienced a layoff, we are able to support them with that and go through documents and all the fine details,” he says. “Overall, maintaining a client rela­tionship over the long term is not always revenue-driven. That’s key for us.”

Building blocks
It’s been a consistent rise for Chui, who entered the industry a decade ago and steadily built his client base and assets under management. Developing a strong relation­ship with those who elect to walk into his office has been central to that success.

“I started in 2012 with zero and built the business up to an AUM of $100 million,” he says. “I deal with institutional dollars, too, and sometimes money comes in and out quite fast, so it’s a little lower now at $76 million. I think the biggest thing for my institutional clients is the educational piece. I’m able to share my knowledge, and that’s what they enjoy.”

That know-how certainly was evident when he chose to sell off his oil assets right before the energy crash devastated his home city. Given the economy’s growth south of the border, moving into US assets was a natural switch.

“In 2014, we sold off the oil exposures in our portfolio,” he says. “Since then, I have been sitting more in the cash side. I have been buying consumer staples and sticking to low-volatility strategies. When Canada and the US were near par, we transferred a lot of cash into US dollars.”

Fast-forward to today: Oil has rallied somewhat, although it’s still way below a level Canadian producers would deem sustainable. That said, Chui has decided to reintroduce energy to his core portfolio, Global Core Plus.

“In my portfolio, I have 5% oil. I will be looking to add a little more, but for me, the fundamentals are the same, so I will remain on the cautious side. We do have cash avail­able if we need to purchase more oil stocks.

That could be through an ETF or a specific security.”

Wearing two hats for his team at Wood Gundy as an advisor and portfolio manager, Chui also likes condominium reserve funds as an investment in his home city.

As a portfolio manager, his focus is on Global Core Plus, which is exclusively ETFs and is made up of Canadian, US and inter­national low-volatility assets, with specific sectors such as healthcare a key component.

“I have a high concentration of US, Canada and MSCI – those three account for a large part of my core,” he says. “Then I have been buying in other areas such as consumer staples. We have a team approach here; I work closely with Susyn Wagner, who looks after securities for the team, and I focus on ETFs.”

A balanced approach
Self-avowedly conservative in his investing, Chui prefers to avoid picking specific stocks, focusing instead on sectors with a likelihood of strong returns.

“I have also been looking at healthcare – not a specific stock like we seen with Valeant, which can really hurt an investor,” he says. “It’s better to have a whole basket of health­care stocks across Canada, the US and inter­nationally.”

The loonie’s rally since February is another area with plenty of potential for returns, especially in today’s investment world where different investment vehicles like ETFs are available.

“I think the interesting part about currency and its constant changes is that for ETFs, you can now have Canadian hedged or unhedged,” Chui says. “I have a US dividend growers index that’s hedged in Canadian dollars. That has more than doubled what the S&P composite has done, year-to-date for May. As a discretionary manager, we are not just buying and holding passive securities; we really have to look at currencies.”