| Beating the benchmark at BIAM |
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| Following the end of Chris Reilly's tenure as chief investment officer of Bank of Ireland Asset Management (BIAM), the asset manager installed a new leadership team to take responsibility for its investment activities. As newly appointed managing director of global equities, Paul Boyne is responsible for ensuring that he makes the very best use of the research available, and that ultimately the right stocks end up in the asset manager's portfolios. |
1. How do you define success in fund management? I think success in fund management is based on a number of ingredients:
• Having a well defined investment approach that clients can relate to and that delivers value in the long term.
• Having the conviction to do what you believe is in the best long term interests of clients ‑ even if that is different to the prevailing wisdom in markets
• Keeping close to clients so that you genuinely know and understand their needs and can respond proactively to changing demands.
2. What are your goals for the business? As you know, during the summer Bank of Ireland Asset Management (BIAM) appointed a new leadership team to take responsibility for its investment activities, following Chris Reilly's very successful 20 year tenure as CIO of BIAM. During this period the business grew from €1.2 billion in funds under management to ?43 billion, notwithstanding the recent period of underperformance.
Taking over from Chris, the new team had a number of priorities. The first of these is to ensure that everyone recognises that as a team we remain steadfastly committed to our value discipline, and bottom-up stock picking approach to investing. This has not, nor will it change.
The new team structure also provided us with an opportunity to introduce a global research platform and under Chris Johns, who was appointed managing director of global research, we now have a very significant research capability that is available to each of our investment teams and covers all global equity, fixed income and property research. This is a newly created position and one that we believe will add significantly to the investment performance we generate in the future.
As managing director of global equities, I am responsible for ensuring that we make the very best use of the research available to us and that ultimately the right stocks end up in our portfolios. We have also continued to add experienced resources to the team ‑ the most recent addition being Jamie Wood, who has joined us as a senior equity manager. Jamie has more than 15 years experience in investment and finance ‑ most recently with Newman Ragazzi Partners in London, where he was responsible for generating investment ideas for the firm's $500m flagship hedge fund.
Sean Crowe, the former global head of trading and investment at Bank of Ireland Global Markets, was appointed managing director ‑ global fixed income and specialist products. This is also a newly created role and Sean is responsible for growing our fixed income, credit and property portfolios and also has direct responsibility for the delivery of any new products we develop. This element of Sean's role is very important to us, as it is the area where we will incubate new ideas and foster product innovation. Already Sean and his team have a number of new products in the early stages of R&D and we would be very hopeful that we will have a number of exciting new products to bring to customers in 2007.
As a team we are very confident that the new structure and the changes we have made will improve investment performance, will ensure we are positioned to meet our customers needs for more specialist and sophisticated products in the future and will also ensure that we are fully aligned and in tune with the broader trends in the global investment industry
3. What are the greatest challenges & opportunities facing the investment management industry at the moment from an institutional perspective? Challenge: From an institutional perspective, one of the biggest challenges we face is to come up with solutions that will help clients deal with the deficits they face between their assets and liabilities. Institutional investors need strong absolute returns from the investment management industry today. Investment performance has always been crucial but now asset management companies need to concentrate on developing sources of alpha that complement their existing strengths and they are doing this by investing in their investment and research resources and capabilities.
Opportunity: The demand for investment management expertise globally has never been greater and thankfully shows no signs of slowing down. This means that there are plenty of opportunities for those investment managers who can genuinely bridge the gap for investors. For me, this means having the ability to respond nimbly to the changing needs of investors and ensuring that we have resources and expertise to deliver over time.
4. The Irish market has performed exceptionally well over the past number of years ‑ can this rate of growth continue? What is your prediction for the rate of return of the ISEQ in 2007? As a house we continue to be optimistic about the Irish market. We believe the foundations and drivers of our recent economic success are still very much in place. The key point of differentiation versus our peers is a strong demographic position. Our population expanded 2.5 per cent in the year to April which puts us in stark contrast to mainland European economies. Irrespective of the SSIA effect, consumer incomes look to be in good shape. The most obvious risk remains the housing market. However, we are continually developing significant offsets to deal with a shock. For example the €2.5 billion savings habit developed on the back of SSIAs is equivalent to a 2.5 per cent interest rate increase.
In terms of a forecast return for the ISEQ for 2007 ‑ 12 per cent seems achievable taking the index to north of 9,500. Consensus estimates expect earnings in the Irish market to advance nearly 15 per cent in 2007. For this you pay 13.4 times and receive a yield of 2 per cent, which compares very favourably with what is available in other markets. |
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