Karl Cheong, CFA
CAREER HIGHLIGHTS

• Head of ETFs Canada since 2015
• Board of Directors at First Trust Portfolios Canada; responsible for setting the firm’s strategic direction and raising more than $1 billion in ETF assets since 2013
• Launched many products as Canadian firsts—including the first U.S. Dividend ETF, the first European ETF, and the first Broad Commodity ETF—with an aim to helping Canadians retire wealthier
• Vice-president, and head of ETFs and structured products, at Claymore Investment Inc. from 2009 to 2012 (merged with BlackRock Canada)
• Featured in articles in BNN, Bloomberg, Financial Post, the Globe and Mail, Reuters, and Morningstar

What made you want to focus on exchange-traded funds (ETFs)?

In 2007/08, shortly after obtaining my CFA charter, I began exploring various career paths. Most of my fellow classmates at that time wanted to pursue investment banking or equity research. I saw something else. The ETF industry was in its infancy in Canada; there were only a handful of ETF firms. I was drawn to this relatively uncharted territory to develop ETFs for the Canadian market. Around the time I became involved in the ETF industry in 2009, there were only approximately 80 products listed on the Toronto Stock Exchange. I saw a great market opportunity and wanted to capture it.

In his 2018 book on indexing, Stay the Course, former Vanguard CEO Jack Bogle wrote, “I’d estimated that at least half of ETF assets are held by institutional investors and traded furiously,” and “Stock trading is the enemy of investors.” What are your thoughts on this?

Traditional investment products such as mutual funds were established almost 100 years ago and were a fair option for my parents’ generation.

But times have changed. ETFs represent a better investment technology. ETFs inherit the merits of mutual funds—the exposure to indices or baskets of stocks and bonds—yet have cheaper fees and are more tax-efficient. ETFs are also much more liquid and transparent.

I love Bogle, but here I think he is wrong. You can trade an ETF intraday and people get excited about that, but that’s not what matters. What matters is that [ETFs] are inherently lower cost and more tax-efficient. More importantly, the fact that day traders are out there trading these ETFs back and forth doesn’t impact me as an investor. I can buy that ETF, benefit from its low cost, and ignore all the external activity. You don’t have to be one of those people who buy and sell.

Now that you’re in a leadership role at First Trust Portfolios Canada, what qualities in a team member do you value most?

I value a positive disposition combined with a strong interest in the ETF industry. Most people have the capacity to acquire general knowledge about the ETF industry, but in order to be a contributing member of my team, one needs to have the passion and drive to acquire in-depth knowledge about all aspects of the ETF market and overall financial conditions. Therefore, prior experience in the ETF industry is a plus but not a requirement or determining predictor of success.

Secondly, I value team members with integrity and a strong client service orientation: in other words, members who are willing to go above and beyond to add value to our organization and for our clients while conducting themselves in a professional and ethical manner.

How do you lead and motivate a team?

I believe the most effective leaders lead by example. When challenges arise, I roll up my sleeves and get down in the weeds with the rest of the team while ensuring focus on First Trust’s mission—to offer investors a better way to invest. During my professional career, I have faced many challenges that taught me many tough lessons, and I am always happy to share my experiences with the team.

What does the CFA qualification mean to you? Do you think it’s a competitive advantage for employees to have?

I obtained my charter in 2006. The CFA program covers a breadth of topics that provided me with the technical knowledge to tackle complex financial questions. As a result, I had the much needed confidence and the skill set at a very young age to create and oversee some of the industry’s most innovative and successful products such as Canada’s first European ETF, U.S. Dividend ETF, Managed Futures ETF, and Broad Commodity ETF. These, and the rest of our First Trust products, aim to help contribute to the prosperity of our Canadian clients.

Potential employers of CFA charterholders can have confidence that their candidates are highly qualified individuals with strong technical skills and [a strong] code of ethics.

What do you do when you’re not in the office?

I spend a significant amount of time speaking at industry events and media engagements.

During my personal hours, I continually look for investment opportunities to diversify my revenue stream. In addition to real estate, I’ve recently become involved in a restaurant venture in the Entertainment District in downtown Toronto.

I also want to maintain a healthy lifestyle—even with my unpredictable schedule. I wake up at six every morning and head to the gym (yes, even on the weekends). It not only strengthens my muscles but refreshes my mind.

The most valuable thing to me is my family. I have two little girls and make sure I spend time with them. We go swimming, go to amusement parks, and watch Disney movies.

Whom do you admire most?

My mom. My mother had to join the workforce when I was a teenager to support my sister and I. She returned to school to master French—not an easy language to pick up—in order to work in Montreal. Whenever I encounter challenges, I think of her and her never-give-up attitude.

FUN FACTS
Superpower you’d most like to have:  A power that allows me to go without sleep.
Hidden talent(s):  I’ve run a few marathons and also dabble in ballroom dancing.
Interesting fact:  I had eight cats at one point. In 2004, I was studying for the CFA Level 2 exam at a local Tim Hortons. One night, a staff member approached me and asked if I’d be interested in helping an abandoned cat. As an animal lover—I already had one cat at home—I couldn’t resist. What I didn’t know was that the cat was pregnant and subsequently had six babies! Fortunately, I was able to find a home for each of them.
Favourite sport:  I like soccer. In 2006, I flew to Germany to watch the World Cup.

TIPS TO SUCCEED
Hone your communication skills: Being an effective communicator helps me land new clients, win new business, and gain media exposure. It involves both public speaking and engagement with individuals.
Never settle: Surround yourself with people you can trust. Build and grow your alliances with those who can support and encourage you.
Develop a reading habit: Always have a pile of titles that help you to stay in front in your profession. Set a goal, for example, to read at least one book a month. The New Confessionals of an Economic Hit Man by John Perkins is one recommendation.
Have “fear”:  Be afraid about being stagnant, not growing, and not learning professionally and personally.