FWR recently talked with the chief investment officer at the North American bank's private wealth management arm about broad asset allocation positions, risks and how clients view developments.

CIBC’s private wealth management chief investment officer says the firm remains biased toward risk assets but not quite as enthusiastically as in recent years.

The firm is positioning for US equity returns of closer to the longer-term historical average of 8 to 10 per cent, Gary Pzegeo, chief investment officer for the CIBC Private Wealth US team, told Family Wealth Report in a recent call. A mix of factors, such as relief on tariffs, post-Covid fiscal policy tailwinds, and the boost from AI are not likely to be as potent in 2027. 

Pzegeo speaks with the seriousness of a CIO whose business oversees about $100 billion in wealth. 

“We are tilting towards ‘risk-on’ but less than we have in previous years,” Pzegeo, who assumed the CIO role last year, said.

Asked about opportunities inside and outside the US, he replied: “We look globally and we see comparable rates of earnings growth at much more reasonable [price-earnings] multiples. That’s leading to some capital re-allocation.”

FWR spoke to the CIO at a time when rising bond yields, such as in the longer-dated maturities, for example, 10- and 30-year Treasuries, have been rising, with worries about US rising debt being a factor. (There is a parallel process in several other countries.)

Bond markets are likely to be more challenging next year, he said. 

Investors in bonds have gotten nervous. The US 10-year Treasury yield stands at around 4.85 per cent as of yesterday, pushed higher by worries about oil prices, fiscal issues and heavy corporate debt supply. At the start of January 2026, the yield opened 4.19 per cent.

Switching to corporate bonds, Pzegeo said relatively tight spreads between these bonds and government bonds might, in most cases, be a red flag that widening was in the offing. 

“Corporate [yield] spreads in investment-grade and high-yield [bonds] have been tighter than usual. It may normally have rung a relative value alarm bell but today’s credit risk premium is supported by stronger-than-usual balance sheets at this point in the economic and business cycle,” he said. “For the US, corporate revenue is rising faster than the interest expense line.”

Private credit benefits from similar fundamental strength with the notable exception of lower quality software loans, he said.

The ICE BofA AA US Corporate Index option-adjusted spread stood at around 0.59 percentage points over Treasuries, with the AA index's effective yield at 5.38 per cent as of September 2, against a 10-year Treasury yield of roughly 4.79 to 4.83 per cent around that time.

Pzegeo said CIBC likes mortgage-backed securities with a decent yield spread considering the yield potential.

Asked about hedge funds, Pzegeo said CIBC does incorporate them into its investment models. “We tend to avoid leveraged `risk-on’ plays,” he said, “we look for strategies that are more sustainable.”

Markets have been volatile, and a task for wealth managers such as CIBC is how to keep clients composed. 

“We talk to them about prior episodes that have had a disproportionately negative effect on clients’ psyche…we also look at how markets and policymakers have historically adapted to market volatility,” Pzegeo said. “Also, we look at the fundamentals: earnings, etc. If they [companies] are in reasonably good shape, then returns tend to revert to normal patterns. We’ve looked at dozens of episodes that show that we can work through this.”

In August, this news service interviewed Citi Private Bank about how its clients are holding unusually high levels of cash. FWR asked Pzegeo whether CIBC sees the same phenomenon. 

“It [cash] is lower than it was a couple of years ago. We like to be fully invested…that leaves some room for cash. Having a bit of cash makes sense,” he said.