Lombard Odier Investment Managers (LOIM), the institutional asset management arm of Lombard Odier Group, has appointed an Insurance Linked Strategies (ILS) team to offer institutional clients a further asset class with low correlation to mainstream assets. Gregor Gawron joins with team members Simon Vuille and Marc Brogli. Gawron led the CAT bonds and ILS offering at Dynapartners and before that at Falcon Private Bank. Prior to this, Gawron was a portfolio manager in the ILS team at RMF/Man Investments, where he worked closely with his current team.
Based in LOIM’s office in Zurich, the ILS team will report to Jan Straatman, LOIM’s Chief Investment Officer.
“CAT bonds are uncorrelated to other risks, including economic and capital market events, while the 4%-6%1 returns on offer remain attractive. The overall ILS universe size is close to $60bn2 and growing steadily.” Straatman said. “Investors face multiple challenges that are tough to reconcile: low growth, zero interest rates and valuations getting stretched. Institutions can find themselves lured into taking more risk without getting the returns expected. We need to help clients increase returns while safeguarding capital and that means better building blocks for portfolios. CAT bonds possess those qualities.”
Gawron’s team uses a proprietary approach aimed at optimising portfolios of insurance linked securities and targeting maximum diversification across different risk types, and different regions.
“We are excited to bring our ILS offering to LOIM, whose values we share and where we can leverage the firm’s sophisticated infrastructure to benefit investors,” said Gregor Gawron.
The ILS/CAT Bond boutique expands LOIM’s high conviction fixed income range. “In the next couple of years, fixed income will be more volatile and subject to rising rates”, adds Jan Straatman. “It will be crucial to add active and high conviction strategies which protect clients better against rising rates, instead of the traditional market cap based strategies. CAT bonds can meet these criteria with a higher starting yield and floating rate coupon.”
LOIM’s Geneva-headquartered business managed $49 billion on behalf of clients at the end of December 2014. LOIM’s managers seek to deliver performance by identifying sources of risk and return through absolute return, smart beta and high conviction strategies. LOIM offers a range of solutions including risk-based asset allocation, thematic equity investments, convertible bonds, absolute return as well as single-manager hedge funds.
