Stephen Gerring

Nonetheless, judging by the shifts in asset mix that Gerring has made over the past four years, he has the courage of his convictions. At the end of 2002, caution ruled. He held just 34% of the fund in common shares, with the remaining 66% conservatively positioned in preferreds, bonds and cash.

But over the past few years, "I've reversed it," notes Gerring, who currently holds 66% in equities, which is roughly his upper limit. As noted by Morningstar senior analyst Mark Chow in an October 2005analyst report, the shift to a more aggressive stance boosted the fund's returns since it coincided with rising equity markets.

More recently, Gerring's accomplishments were recognized at the 2006 Canadian Investment Awards gala, when the fund received the trophy in the Canadian Income Balanced category.

There has been no talk about capping CIBC Monthly Income, a 5-star rated Canadian Portfolio fund and the eighth largest among all mutual funds in Canada. Nor does Gerring consider the size of the fund onerous.

He remains the sole manager of the fund, as he has been since its inception in September 1998, and he continues to do his own research. But he has given up doing his own trading.

For Gerring, the fund's size necessitates a focus on large-capitalization issues in his 48 current equity positions. Despite the fact that equities "can go negative in a twinkling of an eye," Gerring says that his blue-chip stocks, with market capitalizations north of $20 billion each, are going to hang tough.

In striving to keep his hypothetical average investor from losing money, Gerring's stock-selection process combines both bottom-up and macroeconomic criteria. Though Morningstar's style box currently places CIBC Monthly Income's holdings in the large-cap value camp, he is a self-described growth-at-a-reasonable-price (GARP) investor. He says he is not interested in buying a company if the earnings aren't going to grow, nor does he want to pay a monster multiple for that growth.

In keeping with the fund's objectives, the dividend-rich financial sector makes up 30% of the overall portfolio. The banks have paid dividends for umpteen years, are managed well and are quite stable, says Gerring.

Over the past few years, Gerring has also shifted his choices among bonds. Because of the larger portfolio, and the fact that he considers corporate bond spreads tight now, more than 80% of the bonds are held in Government of Canada issues.

The fixed income holdings are in shorter-term issues, since at the moment Gerring doesn't see the value in a five-year bond with a yield of around 4%. Hence, he is also comfortable with the recent cash position of 17% within the fund's maximum ceiling of 20%.

Gerring is very much a buy-and-hold manager, as evidenced by CIBC Monthly Income's average portfolio turnover of just 4.4% during the past five years ended in 2006. "I don't sell," he says, in what is not much of an exaggeration. Among his rare sells last year was Loblaw Cos. Ltd. ( L/TSX), which he describes as a position that went bad. He got rid of the stock at around $52, losing about $8 a share.

Gerring, 61, received a BA from the University of Toronto in 1968, and then an MBA from the University of Western Ontario in 1970. After travelling throughout Europe, he joined Prudential Insurance Co. of America in Toronto in 1971.

For six months in 1977, he worked at Citicorp Ltd. as an assistant manager, then worked for six months for the Ontario government as a policy advisor. He then returned to Prudential in 1978.

Gerring received the CFA designation in 1989. In 1992, he moved to CIBC, then flying under the TAL Global Asset Management Inc. banner.

In addition to running CIBC Monthly Income, Gerring also remains the only portfolio manager for bothMD Dividend (since its inception in 1993) and CIBC's Imperial Canadian Dividend Pool (since June 1992). Total assets under his management are now well over $8.3 billion.

Most recently, Gerring took on a 40% portfolio management role for the newCIBC Global Monthly Income, which was launched in December. His responsibilities include the domestic equity and fixed income components of the fund, which has already grown to $294.6 million.

Gerring's asset mix in CIBC Global Monthly Income is currently 47% equities, 36% bonds, 15% cash and 2% preferred shares. There will be very little that he buys for his portion of the fund that is not in the monthly income fund, he adds.

Regardless of what mandate he manages, the word from Gerring to equity investors is to not expect too much. "Really, it's hard to imagine a double-digit return from equities next year, the way we've had for quite a few years," he says. "I'm really trying to be as cautious as I can be -- trying to put together a portfolio that I think will have a hard time going negative."