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Institutional Investment - May 22, 2008

Interview with Theo Jeurissen

In this month's interview, we speak to Theo Jeurissen, Chief Investment Officer, PMT and Chairman of the EDHEC Risk and Asset Management Research Centre's International Advisory Board about the regulatory and business challenges facing European institutional investors.

Theo Jeurissen

You have recently accepted the chairmanship of the EDHEC Risk and Asset Management Research Centre’s International Advisory Board. Could you tell us how you came to be interested in EDHEC’s research and why you agreed to take up this position?

Theo Jeurissen: In my working life as a professional investor I have always tried to underpin investment decisions with academic research. During, let’s say, the last five years, EDHEC’s research centre has proven to be very valuable in this respect, because it provides state-of-the-art research about current topics. In return I hope that the advisory board can contribute to the relevance of the centre’s activities and that in my role I can help to create a meeting point between the worlds of investing and science.

As chairman of the investors committee of the Dutch association of pension funds, you have been ideally placed to assess the regulatory and other challenges faced by European pension funds. One of the themes at next month’s EDHEC Institutional Days in Paris will be whether short-term prudential constraints endanger long-term investment objectives. What is your view on this question?

Theo Jeurissen: I suppose it is too simple to state that regulatory constraints endanger long-term objectives. There has always been and there will continue to be a tension between the need for capital preservation and the need for real returns in the long run. Recent changes in regulations have rightly brought this issue to the front. Care should however be taken that in a highly dynamic world regulations leave enough room for a flexible response if needed.

As head of investments with the largest private sector pension fund in the Netherlands, you are also a key observer of the non-regulatory challenges ahead. What do you think the main issues will be over the next few years?

Theo Jeurissen: After decades of a favourable environment, which economists now label “the great moderation”, we have entered into a phase which poses bigger challenges to achieve adequate returns. A “blessing in disguise” from the present credit crisis is, that -I suppose- investors will have learned that simple ways, like using ever more leverage, are not sustainable. So we will have to dig deeper, if I may put it in those words. Innovative investments will become a bigger part of overall assets. Understanding and managing this type of investments will be a major issue over the coming years.

How do you think EDHEC’s research can help pension funds to cope with these challenges?

Theo Jeurissen: The EDHEC research centre is ideally placed to help pension funds to deal with new types of assets, because it understands the often complicated mathematical backgrounds of these assets, has the capability to make clear in which situations such assets can be of importance and, very important, has the experience to evaluate possible pitfalls in practice.

About Theo Jeurissen

Theo Jeurissen has been Director of Investments with PMT since 2001. He is responsible for the fund's investment policies and oversees the investments handled by PMT's management company.

He has been involved in the investment world for over 20 years. Before joining PMT, he worked in the investment department of ABP, the Dutch civil-service pension fund. As a member of ABP's Board of Directors, he was responsible for equity management and investment policy development. He has also held several other posts, including Chairman of the Investors' Committee of the Dutch Association of Industry-wide Pension Funds.

Theo Jeurissen is Chairman of the EDHEC Risk and Asset Management Research Centre's International Advisory Board.