(November 12, 2013) — Theodore Economou, chief executive of the CERN Pension Fund, has taken over the additional CIO role at the CHF4 billion ($4.3 billion) Switzerland-based pension fund, aiCIO can reveal.
He replaces Gregoire Haenni, who took on the role in March 2010. It is understood Haenni has left the pension fund to pursue a role in another branch of finance.
A former Pictet financier, Haenni joined CERN from the Bank of China, where he was head of research and investments. He was listed in aiCIO’s 40 Under 40 in 2012.
Economou already had ultimate responsibility for the overall investment strategy at CERN, under the rules of the pension fund board, but assumed the official CIO role in September after an internal reorganisation.
Haenni is to remain at CERN pension fund as an advisor until at least the end of 2013.
Economou has overseen a dramatic shift in both asset allocation and investment strategy during his time at CERN.
In 2009 when he joined, the fund had a portfolio divided 60% in risk assets and 40% in bonds. It was 60.5% funded on an IAS19 basis, down from over 70% a year earlier, according to its accounts.
Like the majority of pension funds continue to have, CERN’s pension fund had a return-based approach. Economou realized that had to change, and moved to a scenario where the fund was aware of their liabilities without being tied down by them.
By the end of 2011, the fund had moved to holding 28% in “diversifying assets”, which included real estate, commodities, and other absolute return securities. Bonds and equities made up more than 30% of the portfolio each, with the remainder held in cash.
A rigorous risk framework followed, as Economou explained: “We look at risk management as two processes. One: the overall risk management process, showing us the acceptable risk constraints. This tells us what the size of the sandbox we can play in is.”
The measurement of this “sandbox” is through a system called Conditional Value-at-Risk which shows trustees the guidelines within which investments will sit. The investment team identifies the characteristics of fund managers and creates a type of DNA for each one, before choosing which ones suit their strategy the best.
Read more about Economou’s view on the world here.
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