New finance professor keen to instil in students the importance of fixed income

Colin Ward easily recognizes his younger self in business students now in their early 20s. Dazzled by the idea of analyzing stocks, they’re mostly unaware of something far more significant to the world of finance.

“They don’t really know much about the bond market.” says Ward, who on July 1 joined the Alberta School of Business as an associate professor in the department of finance.

“It’s like the elephant in the room, that big important object that doesn’t get much attention. When you look at the Wall Street Journal or the Globe & Mail’s Report On Business, the news mostly has to do with stocks. But in industry, the bond market is much bigger than the equity market and more important to the livelihood of the average Canadian. It’s responsive to things like unemployment and inflation. An interest rate moving from four per cent to 3.9 per cent—a point-one per cent change—it doesn’t seem like much, but it is.”

Ward, who came to the University of Alberta after a decade as an assistant professor of Finance at the Carlson School of Management at the University of Minnesota, did start his finance career as many business students aspire to, as a stock trader on Toronto’s Bay Street.

However, he soon discovered that the torrid pace of the trading floor left little room for thoughtful reflection or analysis, interests which had prompted him to switch his major as an undergrad from computer science and then accounting to finance and economics.

Ward remembers he’s always been looking for, “the connection between real work and a systematic understanding of it.”

After a more satisfying stint focused on economic forecasting for TD Securities, Ward earned a master’s in financial economics at the University of Toronto, followed by a PhD in Finance at the Wharton School at the University of Pennsylvania.

He’ll be bringing both his industry and academic experience to classes on fixed income, come September. Yet Ward is also well-versed in what makes companies profitable and how money is traded.

His two major areas of research are intangible capital and foreign exchange markets.
Intangible capital (any aspect of a company that’s not a physical asset, including its organizational processes, the special know-how of its leaders and employees, its computing power, trademarks, brand, etc.) interests Ward because it’s the most important element of a firm’s value, it’s growing in importance, yet it’s fiendishly difficult to measure.

“When I show you a car, I have an idea what it’s worth but if I show you a computer program, well, I don’t really know,” he says. “There’s a lot of uncertainty connected to intangible capital, which makes it even more important.”

Ward’s interest in foreign currency trading stems from knowing that “trade is a big part of the Canadian economy, so it’s something to understand, and the closest thing to trade in finance is currencies.”

His current research includes discovering how trade deals between countries impact a foreign currency’s worth, how that’s measured and how it changes over time.

In addition to convincing students of the importance of bonds as they form their educated impressions of financial markets, Ward is looking forward to following several other passions that align with his and his family’s move to Edmonton.

“I play hockey and snowboard and am trying to do a lot more of that before I get too old,” he says, noting that his wife is also an avid hockey player. “It’s pretty flat in Minnesota, so I’m looking forward to seeing Jasper and to the three or four-hour drive toward Calgary and the mountains. I’m totally going to explore that a lot.”