The Sky's the Limit for TDAM's New Chief Investment Officer

David Sykes joined TDAM in 1999 and since then has made an indelible impact on multiple areas of the company. His credentials are extensive and include a Bachelor of Commerce and a Bachelor of Arts from Saint Mary’s University, an MA in Politics, Philosophy and Economics from Oxford University, plus an MSc in International Relations from the London School of Economics and a CFA designation.

Ahead of the official commencement date, we caught up with David and chatted about his path to CIO, past experiences, and current thoughts on the economy and investing.

To be honest, I'm not sure what the "typical" path would look like, but I don’t think my journey would be reflective of it. I don’t come from a "finance family", and grew up in Nova Scotia, so I wasn’t a product of a large city, like Toronto. Education wise, I'm not an MBA grad, but I did study economics, along with political science and philosophy.

I started my career at TD almost 25 years ago, and progressively moved into more senior roles. I started off in the retail bank, then made my way into capital markets and finally to TDAM. My many roles on the way up to CIO included junior analyst, senior analyst, back up Portfolio Manager, Portfolio Manager and most recently, lead of the equity group. The common thread throughout all these roles for me was that I have always been curious, and had questions, around capital markets, financing for governments, large corporations and private investments. I always had the desire to better understand the business models, the linkages and "how things worked".

Without a doubt, the most meaningful change has been around technology. It provides instant information, data, headlines and news, which in turn, offers instant access to trading and decisions on a global scale. I often look back and chuckle at the way we used to do things without some of the technology we have today.

It's hard to narrow it down to a single risk, as the economy is multifaceted, but the theme of lower future growth and lower earnings growth is what I spend a lot of time thinking about. I feel that globalization has been a huge driver of increased international trade, comparative advantages and access to more efficient production centers – essentially distant parts of the world have become local. All of this has increased growth, reduced costs and improved corporate earnings.

However, given the recent trade tensions between the U.S and China, and now the conflict in Ukraine, I believe we may enter a period of deglobalization, which in my opinion may mean lower overall growth and lower earnings growth. During times like this, "security" becomes paramount. When I say security, I mean it in many ways: national defense, security of supply chains, security of energy and economic and technology independence. This new focus on security will cause nations to look inward and lead to less cooperation, understanding, trade, growth and interdependence.

Yes, I do have some very tried-and true-advice, and my apologies if it comes off as clichéd, but my advice is to set an objective, a process to achieve it - and stick to it. Investing isn't about today or next week, it's about setting a goal and a plan to achieve that goal. For me, I have a very strong belief in investing, a philosophy based on finding companies with a great competitive advantage, solid growth prospects, strong balance sheets that can endure ups and downs, the ability to generate cash flow and reinvest for future growth, but also to return some of that free cash flow to shareholders. And I want companies to do that again and again and again. This allows for compound growth, which for me, is the only way to invest.

As a kid who grew up in Nova Scotia, the Montreal Canadians were my team. But, after 25 years in Toronto, and now with two boys who play competitive hockey, we have become Leafs fans. But I must admit, following the ups and downs of the Leafs isn't easy. It's a tough town and it's all about performance. I hope they do well, but I still have more confidence in the prospects for results at TDAM!

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