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10 Questions with Mawer’s Paul Moroz

The chief investment officer manages risk with diversification and due diligence.

Editor's note: This article first appeared in the Q2 2021 issue of Morningstar magazine. Click here to subscribe.

Paul Moroz is chief investment officer and a director at Mawer Investment Management, based in Calgary, Canada, and comanager of the Mawer Global Equity Fund. Moroz was named Morningstar Foreign Equity Fund Manager of the Year at the Morningstar Canadian Investment Awards in 2013 for his record at Mawer Global Small Cap, which he comanaged from 2007 to 2020. Before joining Mawer in 2004, Moroz was employed by Alberta Investment Management and Merrill Lynch Canada. He has a Bachelor of Commerce from the Haskayne School of Business at the University of Calgary.

Ruth Saldanha, editorial manager for Morningstar Canada, interviewed Moroz in January.

1. What are the top three things you look for when you pick stocks?

Wealth-creating companies, able and honest managers, and reasonable valuations.

2. What is the biggest risk for international investors right now?

Central banks have kept interest rates low in response to the impact of COVID-19 on the economy. The result has been higher asset prices. How this normalizes—in combination with the growth of the global economy—will impact all asset classes. Easy monetary policy has resulted in dear valuations at the expense of future investment returns. In some cases, there is severe market froth that could lead to poor capital allocation and impairments.

3. Is the worst over when it comes to COVID-19?

The development of vaccines, particularly the mRNA technology, means there is a clear pathway to get back to normal. What is unknown is whether there will be permanent changes in human behavior and how that will impact supply and demand in certain segments of the economy. Markets will also have to transition to a normalization of government support, both fiscal and monetary.

4. Is there a market you’d single out as a value today? Any to avoid?

Canada’s stock market has a high proportion of financial and energy companies that fall into the value camp. Many securities in Japan also have traditional value characteristics. Each market is idiosyncratic and has trade-offs. For example, there are risks associated with SPACs [special-purpose acquisition companies] in the U.S., corruption in Indonesia, and property rights in China. As with all investing, managing such risks requires the right combination of diversification and due diligence.

5. How do you find opportunities in this environment?

Opportunities are found one company at a time. A common theme: securities that require greater work (understanding long-term business prospects, coupled with reclassifying accounting to represent the economic reality) or greater patience (a long-term time horizon).

6. What’s the best investment advice you’ve received?

You can buy well or sell well. But the real money is made when you hold well.

7. What advice do you like to give?

On investing, our firm motto: “Be boring. Make money.” On life: Think about how you will measure your life and live purposefully.

8. When did you first become interested in investing?

I invested in a mutual fund when I was 15 with the cash I earned working in a kitchen washing dishes. I wanted to start an Italian restaurant, too—think about a Subway mass-customization model for pastas. Business and investing have been intertwined for me ever since.

9. Where would you be working now if not in financial services?

Likely at a startup—breaking, re-creating, or innovating some business/customer process.

10. What do you enjoy doing when you aren’t investing?

Sports or physical activity that gets me to a meditative state. Fat-tire biking during the winter in the Rocky Mountains has fit the bill during COVID-19.

Photography by Katherine Calnan

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