Derek Bills has led the investment office of the International Monetary Fund since July 2016. His official title is head and CIO of the investment office, but he prefers “Chief Problem Solver,” because from his vantage point, managing an institutional portfolio is all about finding innovative solutions to problems, but doing so before they become problems.

Bills, who can reach 25 years with the IMF in November, leads the management and investment of the IMF’s Staff Retirement Plan and Retired Staff Benefits Investment Account, which are fully funded and total more than $15 billion in assets.

During his tenure, Bills has played a key role driving growth and the evolution of the investment office, gaining a comprehensive knowledge necessary to build a dynamic team. Nevertheless, Bills noted that building a dynamic investment office needs staff who can think like CIOs (not as siloed sector specialists) and who understand portfolio construction and the fit of each and every investment within the total portfolio context.

“The investment office motto is: investor first, and sector specialist second,” Bills tells CIO. “I don’t believe anyone is born to be a CIO. You have to give your staff the opportunity and training to become CIOs.”

Bills also attributes the office’s success achieving the institutional return objectives to strong governance that advocates a long-term market view.

Over the last several years, Bills has transitioned the office’s workflow to an operating model that blurs the dividing line between public and private investments. He also and encourages systematic knowledge- and information-sharing to reduce the risk of introducing assumptions into decisionmaking.

This has resulted in investment staff freed from counterproductive constraints and able to concentrate on idea generation, optimizing risk and return trade-offs and, more importantly, putting the interests of the plans’ beneficiaries above everything else.

The new operating model has transformed the investment office’s culture and work practice, thereby empowering its investment staff to objectively question groupthink; preserve an independent analytical framework; and reduce asset-class, investment-manager and investment-specific biases that can lead to sub-optimal portfolio construction, according to Bills. In addition, it helps the team seek sophistication and avoid complexity, which could otherwise introduce uncompensated risks.

The investment staff has multi-asset-class knowledge and experience, and every investment strategy is covered by two principals (rather than one primary and one backup) to ensure objective decisionmaking, Bills says.

In driving the transformation of the office, Bills told CIO that diversity in thinking and setting high standards, rather than rigid rules, have been key.

The diversity of thought comes in part from the diversity within the office itself. The staff of 18 people includes 16 nationalities and women make up almost 70% of the staff at all levels.

“Just like building a resilient portfolio, when you put together a diverse mix of talent, you create a resilient team that can tackle any challenge. That is the real strength of our office,” Bills says. “Market environments are always changing, and you need a dynamic investment office that can skillfully tackle rising challenges with objective thinking, idea generation and innovative solutions.”

—Dusty Hagedorn