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Tim Pickering credits growing up on a grain farm in Saskatchewan, his finance degree from the University of Calgary and what he learned during his first job trading at TD Securities for his different take on investing. The founder and chief investment officer of Calgary-based Auspice Capital Advisors prefers to put the bulk of his money in managed futures, which he says aren't directly tied to the stock market. To him, it's a more stress-free way to invest. The Globe and Mail spoke with Mr. Pickering recently about what he describes as his "alternative" investment approach and why he shuns individual stock picking.
What was your first investment?
The first investments I had as a young person and when I started my career were in stocks, mostly because I didn't know any better. Once I got to TD and learned more about investing I realized there were better ways to invest than in individual stock names.
What's your investing philosophy?
People have to decide if they're going to invest as a hobby, if it's for excitement or a means to an end. I trade professionally. It's what I do for a living. I look at it as a vocation. To me it's like being a bricklayer or a plumber: There's a process, there are steps, there's discipline, quality control. I do it in a very unemotional means-to-an-end type of way. I don't think it should be stressful. My goal isn't to spend too much time on my portfolio. I put a lot of time into the asset allocation, so that I'm not reacting to the emotions and whims of the stock market.
What's in your portfolio today?
What I would call "alternative investments" makes up 75 per cent of my assets, a large portion of which are in managed futures and global macro funds, which have no correlation to the stock market – or anything else for that matter. It's in sectors such as private equity, real estate, commodities, farmland and infrastructure. Only about 10 per cent of my portfolio is directly in equity and fixed income, which today is primarily in energy stocks, and about 15 per cent is cash.
Do you use an adviser?
I started by splitting my assets between an investment adviser and myself. Early in my career I had less time to focus on my investments. That was probably because I was spending a lot more time investing in stocks as opposed to how I do it now. Today, I control most of my assets. I'm not against advice from an adviser. For myself, an adviser has a great role in terms of estate planning and insurance. In general, I've had bad luck with advisers. As soon as they get away from asset allocation and into stock picking, then that is not of interest to me.
What has been your worst investment to date?
That's easy. I've had advisers picking stocks on my behalf and those have been terrible investments in general. Also private equity has been a tough area. I've had private equity deals where I've lost a lot. The lack of liquidity is a problem. I think private equity is a great area, but unless you have the time, sophistication and breadth to cover a lot of private equity, picking individual private equity isn't something I'd recommend. For most investors, I think private equity should be owned through a fund structure, with a very experienced fund manager.
What about your best investments?
Probably the best investment I've made is launching my own business. There's also my overweighting in CTAs (commodity trading advisers), or what most people in Canada call managed futures. Another is buying farmland. I jumped into the private farmland area with a group of investors about nine years ago.
What advice do you have for investors?
You should be able to build a portfolio that doesn't need a lot of hand-holding. It should be a mix of investments that has some stock market exposure, but doesn't exclusively rely on the whims of the stock market. That's about asset allocation. It's about putting together a combination that provides you long-term investment potential without a ton of stress.
This interview has been edited and condensed. For this series, a high-net-worth investor has investable assets of more than $750,000.