Keith Collister, Business Writer

Ray Chang, president of CI Investments, takes a conservative approach to investments.

CI Investments now has C$75.5 billion under management to August 31, its president Ray Chang has said.

The majority, C$58.4 billion, is part of the segregated fund assets of CI Investment and United Financial's family of mutual funds, while the other $17.1 billion are assets 'administered' by the fund's 800 financial planners.

CI Investments has 44 mutual and segregated funds with top five-star rating as at July 31, 2006, the highest rating in the industry, Morningstar Canada reported last month.

Chang, a Jamaican/Canadian, joined CI in 1984 as vice-president when as C.I. Funds it had only $5 million in assets under management.

He became president and chief operating officer in 1994 around the same time the fund went public on the Toronto Stock Exchange, and subsequently was named president and chief executive officer in 1996. CI Financial is now a wholly owned subsidiary of CI Financial Income Fund, an income trust listed on the Toronto Stock Exchange.

Chang, who is also chairman of GK Fund, on a visit to Jamaica a week ago, gave his views on investing at a function of First Global Financial Services, which offers 38 of his CI Funds:

Investment universe

The investment universe is wide: Using the analogy of colourful soaps, Chang said a variety of options were available and advised that investors invest in products that appeal to them.

For periods greater than three years, equities outperform fixed income, said Chang. He recommends that Jamaican investors invest primarily in equity funds, as they typically hold higher yields than Jamaican fixed-income instruments. Local interest rates, he believes, will remain higher than those overseas due to heavy Government borrowing.

But, since Jamaicans live and spend in Jamaica, some of their money should always be invested in liquid Jamaican fixed-income securities, he adds.

Although he personally is an investor in Pegasus, Chang was cautious about the local stock market, saying even local stocks like a Bank of Nova Scotia have very low liquidity.

The fund manager has a conservative outlook, saying that most of the money invested in CI's funds are people's savings that they cannot afford to lose. Most people, he said, can't save more than 5-10 per cent, and it would take at least half a decade for them to rebuild their nest eggs if they lose their investments.

Said he of investment managers who take big risks: "Those who live by the sword, die by the sword," adding that currency trading for example was a 24-hour job.

Core investments

The typical investor should put the majority of his/her funds in what Chang calls 'core investments which he classifies as mutual funds that have invested in U.S., European and Canadian 'blue chips' and which in his view also now includes much of the Pacific region (with the important exception of China).

The rest of the money can be invested in riskier investments such as emerging markets or industry-specific funds.

The investor's primary goal should be to conserve capital, and the closer an investor is to retirement, or the higher his/her degree of risk aversion, the more money that should be held in "conservative" core investments, he said.

A simple rule is: If the investment makes you lose sleep at night, don't do it. "Nothing is worth a lack of sleep," said Chang, advice that is in line with the old Wall Street adage, 'Sell to the sleeping point'.

Chang also suggests that investors should set targets for returns and stick to them, citing the personal example of his actions during the 'dot com' bubble of the late 1990s, when he repeatedly took profits - when his five per cent allocation to technology became 10 per cent due to capital appreciation - ensuring that he had taken his initial capital investment out before the final collapse.

Chang's final advice was for investors to know themselves, and not to be 'too greedy', to look beyond the short term in their investing decisions, but to have in their portfolios instruments that are liquid, that is, easily converted to cash, to finance, for example, college fees.

In terms of his current investment views on the international markets, the CI president remains bullish on commodities long term.

He notes that while the U.S. housing bubble may have burst, he would not underweight the U.S. stock market at this time, saying he believes the market's relative valuation has improved.

Long-term trends, such as the apparent shift of world economic power to the Far East, he says, should be watched by investors to take advantage of emerging opportunities.

business@gleanerjm.com