Lombard Odier Investment Managers (LOIM) has named Théodore Economou as chief investment officer of its $5.2bn multi-asset business.
Economou (pictured) will step down from his current role as chief executive and chief investment officer of the CERN Pension Fund at the end of the month before beginning at LOIM on 1 February.
During his five years at CERN, Economou initiated a ground-breaking risk-based approach which became known as the CERN Model. The multi-asset, factor-driven model aims to preserve capital while maximising returns relative to risk.
The new role, which also includes heading up LOIM’s fiduciary management business, will see Economou build on a risk-based approach the manager began applying to its own employee pension fund in 2009 and further developed for other institutional clients, including sovereign wealth funds and pension funds. He will be based in Geneva and report to chief investment officer Jan Straatman.
Straatman said: “Clients are looking for sophisticated and solid approaches to today’s volatile and low-yield environments. Théodore’s depth of experience running pension funds and his outstanding knowledge of their investment needs in building portfolios will be extremely valuable to our clients.”
Speaking to portfolio institutional in October about the model he introduced at CERN, Economou explained: “You need to be flexible to manage the risk and find those opportunities where you can get most bang for your buck in terms of return for the level of risk you’re taking. Within the risk constraint, the staff have full freedom to manage the assets.
“We also established a risk-based control loop, which is independent of the CIO. That took the form appointing a risk consultant [Ortec] and giving them the full look-through on assets on a daily basis, agreeing risk evaluation models which would be applied to allow continuous reporting to the board regarding the risks being taken and the returns achieved. This frees the CIO from the straightjacket of the strategic asset allocation. We threw it out the window, but we still conduct a once-a- year exercise asking, based on what we know today, what the optimal allocation would be. We look at this as a reference, but it’s not binding.”
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