David Wong, Managing Director and head of the Portfolio Solutions Group at Toronto- and Montreal-based CIBC Asset Management, appears Aug. 2, 2022, as a guest with Sherman Show hosts Jeffrey Sherman and Samuel Lau. Among other topics, Mr. Wong discusses the differences between the far more fragmented banking system in the U.S. versus in Canada where the “Big Five,” including Canadian Imperial Bank of Commerce (2:30), have 80% market share; $200 billion CIBC Asset Management’s history and business (3:41); his role heading the firm’s manager research team (5:35), which analyzes investment managers across the globe and the firm’s own internal investment strategies “to find the best solutions for clients that best fulfill their objectives.”
While cautioning against “over-optimized” statistical approaches that work only in a back-tested manner for evaluating investments and investment managers, Mr. Wong describes (8:26) the portfolio solutions team’s analytical process, starting with long-term forecast modeling to help determine strategic asset class allocations. “From that, there’s a bit of an optimization, a bit of an art, a knowledge and awareness of the global markets in terms of the market-cap weightings out there, what’s the opportunity set. And then we’ll supplement that with kind of that subjective assessment of where the puck might go.”
Messrs. Wong, Sherman and Lau (19:25) devote much of their discussion to the art and science of selecting individual investment managers – an endeavor Mr. Wong says that is “more effortful than people want to believe.” He emphasizes the importance of going beyond the checkbox of manager credentials to assess their humility “and that open mindedness to know when they’re wrong.” He says gaining that insight into candidate managers that can only come through direct interviews with them. “Probably the biggest thing people get wrong” in the search for good forecasters (22:58), David Wong says, “is looking at past performance and all its variants” through simplistic attribute substitution and rear-focused metrics such as active share and R^2.
The views and opinions expressed herein are as of the date recorded and should not be construed as an offer to buy or sell any securities. Such views/opinions may differ from those of DoubleLine Capital or other of its affiliates and are subject to change without notice. DoubleLine has no obligation to provide any updates or changes. The following audio presentations represent DoubleLine’s intellectual property. No portion of these presentations may be published, reproduced, transmitted or rebroadcast in any media in any form without the express written permission of DoubleLine. DoubleLine has no obligation to provide any updates or changes. To receive permission from DoubleLine please contact [email protected].
Neither DoubleLine nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed.
DoubleLine is not providing any financial, economic, legal, accounting or tax advice in these podcasts. The receipt of these podcasts by any listener is not to be taken as constituting the giving of investment advice by any DoubleLine entity or individual to that listener, nor to constitute such person a client of any DoubleLine entity. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.