A Masterclass in the Art of Patience
Sophia Cheng, CIO of Cathay Financial Holdings in Taiwan is an investor who’s always focused on the big picture. In overseeing the investments at Taiwan’s largest financial services firm, she combines the perspective of a highly educated budding academic with the earnest fervor of a committed environmentalist.
After graduating from National Taiwan University (NTU) in Taipei, Cheng earned her Master of Science degree in Finance, specializing in banking, from Golden Gate University in San Francisco. She went to work for Merrill Lynch Taiwan, but following the global financial crisis, in early 2009, she returned to her alma matter where she began teaching investment banking with a focus on providing innovative solutions and pursuing corporate social responsibility. In 2012 she joined Cathay Financial Holdings as CIO in Taipei.
In 2018, she was invited to be the Chair of the Asia Investor Group on Climate Change, an initiative created to build awareness and encourage action around the risks and opportunities associated with climate change. In 2019, CSRWorks, a provider of sustainability consulting, training, and thought leadership, selected her as a Sustainability Superwoman.
Cheng is very much a woman of science as much as a financier. She is pursuing a PhD degree in climate change and sustainable development at NTU, while continuing to teach “Practice in Investment Banking” and “Corporate Ethics” on a part-time basis. She was selected as Best Teacher in the College of Management a few years ago. She shared her views on a number of issues with Allocator Intel's 1st Annual Top 50 Women in Investment Management.
Tell us about your organization
Cathay Financials is the largest financial conglomerate in Taiwan with total assets of nearly $400 billion. The group serves half of Taiwan’s population; the largest subsidiary is Cathay Life, which accounts for about 70% of the group’s asset, while Cathay United Bank, Cathay Century P&C insurance, and Cathay SITE asset management are major players in their industries.
Taiwan has been relatively lucky, with less impact from the pandemic until recently. We started working from home in May, and so far, it is smooth because we have been planning and testing it for a long time. I miss my team and friends; I hope the pandemic will pass soon, but this seems to be difficult. I also hope that developed countries can release vaccines to more countries, especially to emerging countries. It’s sad seeing the vaccine become a bargaining chip in geopolitics.
Can you give us a sense of the overall asset allocation?
The group’s largest subsidiary, Cathay Life, has more than 60% of its assets in fixed income, 10% to 15% in equity, and the rest in collateralized loans, real estate, and alternative investments. Currently, more than 60% of Cathay Life’s invested assets are overseas investments, hence global insight is an important factor to our success. Because life insurance liabilities are long-term commitments to policyholders, our investments tend to be long-term despite some manageable position for realizing gains. The YoY allocation weighting has remained stable in the past three years. The current allocation is rather optimal, so I would not expect significant change. We had reduced the equity position compared with 2017, reflecting our decision to maintain a strong capital buffer to buy on dips as global market volatility may intensify.
The pandemic led to an additional layer of examination of companies’ financial strengths. And the wildfires and bush fires in California and Australia have encouraged investors to look more deeply into the ESG of companies they invest in.
What are investments you might be looking at in the future?
I am very keen to find more investment related to the green economy, sustainability, and themes related to lifestyle changes.
What has it been like being a woman in the investment world?
I started my career in a world of many more men than women. I always asked myself to do three times the work and be three times humbler than my peers. I did not feel obvious differences as a female, but I did feel a disadvantage from my personality – my weakness, in not being able to ask. It was hard for me to make new friends, ask for favors, or ask for a better salary.
What are the biggest barriers you have faced in your career?
When I became one of the senior managers, I experienced the barrier that some of my colleagues felt that this role was more for men. Sometimes my imperfect English was a barrier because my vocabulary is quite basic. I have been very lucky outperforming as a result of my deep analyses, and I believe the industry has gradually recognized my hard work and genuine personality.
I have been working hard because I cherish my clients’ trust of my work, and I hope to make my company and my country proud. As a female, I also hope to show the world that Taiwan has good talent and good female leaders, too. Being a woman is a burden in a traditional male-biased society, where women tend to do more housework and are more accommodating. Such characteristics can be a strong differentiator in leadership: Women can offer more sympathy for team members, achieve better coordination and cooperation, and offer more caring.
What is it that you should really be looking for when building a team?
It is important to have diversity among team members, so they can learn from various styles despite having similar values and common goals. I found building teams is like art: Carefully match the strengths and weakness of each member and be a good mentor. Then the team can operate on auto pilot after we lead the team to a proactive attitude toward common benefits and a caring culture.
We spend most of our awake time in the office, so why not make it home and make it Heaven. Heaven to me is transparent, fair, and full of love. I always tell my team that people should make the workplace Heaven, rather than looking for Heaven after death. A proper mix of talents is critical to such trustworthy culture.
What advice do you have for women aiming for leadership positions?
I never aimed for leadership, so I don’t know how to answer this question. I believe in the Chinese proverb, “The river will appear when there is enough water.” A talented professional with good capabilities will never be lonely, while a capable person with a good heart will last a long time. I told my students in National Taiwan University and my colleague that “a successful jerk is still a jerk.” I believe that we are in the world to explore, not to demand. Other careers are equally important as mine, so I would do my best and respect the outcome.
If someone hopes to become a leader, they should start with being the best team member and be the glue holding the team together. Lead by example. Learn from the most respected leaders. It is important to think deeply about long-term trends in an industry and be ready for the future.
What’s one key leadership lesson you’ve learned along the way?
There are so many lessons. People grow up a combination of learn-by-doing and do-by-learning. I cherish the lessons that can be learned from experience and hope I can be better next time. Never be afraid of things that are learnable.
What are you looking forward to in the future?
I am very passionate about stakeholder engagements after Cathay Financial Holdings established the Responsible Investment team, which I lead, in 2014. We have learned from global leaders and really hope we can be a leader in Asia. I am studying for a PhD degree in climate change and sustainable development, and I hope that becoming accepted by the academic world means I can be a bridge between scientists and the commercial world and I can help to find solutions bridging the financial industry and sustainable projects: I hope to help more sustainability projects become more bankable and investable.
I am very lucky working in a financial group that cares about sustainability, so I can prove that sustainability will never conflict with return.
What do you do in your free time?
I like to take my kids camping so I can enjoy nature and relax. I like to cook, and my family thinks that I’m a good cook.
This has been edited for length and clarity.