Cover Story: Canada’s Leading Portfolio Managers
Posted on July 5, 2016 in:
Excerpt from: Wealth Professional Magazine June 2016 Issue
The travails of Calgary since oils decline have been well documented, and the pain is far from over. This makes the work Chad Larson and his colleagues at Calgary-based MLD Wealth Group do all the more important.
“Last year was bittersweet.” Larson says. “We ended the year with a positive return net of fees in our core strategy because we were underweight on energy. We were able to squeak out mid-to high returns, which for Calgary was amazing. But it’s tough to take out a billboard and celebrate that because we have empathy for our clients. That net-wealth effect throughout the city right now is hard to ignore.”
Calgary is a city built on Albertan oil, which, in times of US$120 a barrel, made for rapid development and plenty of new millionaires and billionaires. Despite crude’s recent upturn, it is still at a level below what Canadian producers would deem economically viable. Larson explains how this had affected his business.
“It is a little bit Wild West, but it is a good time for us as a firm, “ he says. “The worst time is when we have a raging energy bull market and you are trying to convince clients of the need for diversification or risk management. I have had clients who, in between setting a meeting and arriving at my office, their net wealth increased by 15%, so trying to convince them to diversify was tough.”
The ability to convince clients to think long-term is always a struggle, especially with the kind of returns energy was presenting for years. “People are inherently built to make bad decisions when it comes to their finances,” Larson says. “Calgarians are overweight on energy; they invest in what they know. The are more comfortable with the risk they know than a lesser risk they don’t understand. We have to educate our clients.”
With an AUM of just over $500 million, the firm’s approach is clearly bearing fruit, even as the financial client locally, nationally, and internationally creates plenty of obstacles to success.
“We made a large bet on the US a number of years ago, both in currency and asset classes,” Larson says. “ Lately we have sold that down on equity exposure. One of the largest plays was US multi-family real estate, which has done incredibly well, so we’re looking at where to reposition. We have a big focus on infrastructure globally, and real assets also.”