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Resilience Is the Watchword for Bank of Ireland CIO Paul Droop
A risk factor approach leads Droop to expand into new classes like loans, infrastructure, reinsurance and secured-income assets.
As an investment consultant in Towers Watson & Co.s Dublin office, Paul Droop spent eight years telling Irish pension plans what they should do with their money. Since June 2011 hes been putting his ideas into practice at Bank of Irelands 5.3 billion ($6 billion) pension fund.
Droop has taken a risk factorbased approach to diversifying the funds exposures. The aim, he says, is to build a portfolio that is resilient to as many possible things that could happen in the world. To that end, he has tilted the funds 17 percent credit allocation from core Europe to global mandates, grown private equity to 4 percent (with a target of 5 percent) and moved into such new asset classes as loans, infrastructure and reinsurance, including catastrophe bonds. We can feel pretty confident about the resilience of those in the face of a market sell-off of equities, he explains. Another new area is secured income assets, which for Bank of Ireland means a 5 percent allocation to long-lease real estate, which Droop sees as an attractive alternative to bonds. The fund has an additional 10 percent invested in real estate both listed and private and infrastructure.
An Australia native, Droop, 51, earned a bachelors in economics from Macquarie University and an MSc from University of Londons Birkbeck college. He worked as an economist at the old County NatWest and at InterContinental Hotels Group before moving into the pension business.
Bank of Ireland aims to fully de-risk its pension by 2040. That means evolving into a fully liability-matched portfolio, up from 35 percent today. Droop says the banks so-called Journey Plan seeks to generate strong returns now with an eclectic and opportunistic approach: How would I build a portfolio if I couldnt make any assumptions?
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|Investor Lifetime AchievementRoger GrayUniversities Superannuation SchemeGermanyStefan HentschelEvonik IndustriesU.K. CorporateTony BroccardoBarclays UK|
Retirement FundCentral and Eastern EuropeKatrin RaheSwedbank Investment
|Manager Lifetime AchievementPascal BlanquéAmundiNetherlandsMark BurbachBlue Sky GroupSmall CountriesPaul DroopBank of IrelandFranceSalwa Boussoukaya-NasrFonds de Réserve pour|
|SwitzerlandAdrian RyserMigros-PensionskasseU.K. PublicMark LyonEast Riding Pension FundScandinaviaHenrik Olejasz LarsenSampension|