Video description:

A man in business attire sits in an office. Meet the manager: Darragh O’Dowd, Irish Life Investment Managers appears in the top right corner of the screen.  Upbeat music plays in the background through the whole video.

Video content:

Darragh O’Dowd, from Irish Life Investment Managers, describes their approach to minimizing the impact of market volatility. 

Description: A text banner appears stating Darragh O’Dowd, Irish Life Investment Managers, Canada Life Risk-Managed Portfolios. 

Description: A text banner appears stating Tell us a bit about Irish Life Investment Managers (ILIM)? 

Description: Darragh sits in an office. A text banner appears stating Darragh O’Dowd, Head of Portfolio Solutions, Irish Life Investment Managers, Canada Life Risk-Managed Portfolios.

Darragh O’Dowd: Irish Life Investment Managers is a global asset management company based in Dublin, Ireland. We've been in business over 80 years. We currently manage 130 billion assets under management in Canadian dollar terms. This is across a wide range of client types, including insurance companies, pension schemes, wealth advisors, as well as sub-advisory relationships. 

Description: A text banner appears stating How long have you been in your current role? 

Darragh O’Dowd: I've been with Irish Life for over 13 years, originally joined as a quantitative analyst with a background in quantitative finance and statistics. Over the last five years, I've led the portfolio solutions team where we were responsible for working with our clients across a number of different platforms.

Description: A text banner appears stating Can you provide us a little more colour on the team that specializes in managing multi-asset portfolios? 

Darragh O’Dowd: Our investment team consists of 45 investment professionals spread across a number of sub-teams. From property, indexation, fixed income, alternatives, quantitative investment strategies, as well as portfolio solutions. Overall, we have responsibility for the management of multi-asset mandates in excess of 27 billion. 

Description: A text banner appears stating What investment philosophy does ILIM follow and why? 

Darragh O’Dowd: We believe, if we can protect and enhance our client's wealth over time in a prudent and conservative manner, we will help them stay invested. And this is ultimately what leads to good client outcomes. So in a nutshell, our investment philosophy is about trying to deliver our clients a smoother investment journey, and we do that through diversification and risk management. 

Description: A text banner appears stating What does diversification and risk management mean to ILIM? Darragh O’Dowd: To us, diversification is not only about diversifying across asset classes, be it equities, fixed income, property, alternatives, but also about diversifying within asset classes and making sure that there's no single or concentration in terms of your risk exposure within those asset classes. We also recognize that risk management is necessary because diversification doesn't always work, particularly in periods of excessive volatility like we would have seen in the dot-com crisis, GFC, and earlier this year in terms of the COVID pandemic.

Description: A text banner appears stating Can you tell us a little bit more on your approach to constructing multi-asset portfolios and specifically outcome-oriented solutions that utlize different asset classes? 

Darragh O’Dowd: The views of the overall investment team and the different sub-teams within that, feed into the Strategic Asset Allocation Committee. Importantly, this design process incorporates both a mix of qualitative views and quantitative analysis. The latter is particularly important as it enables us to assess on a forward-looking basis risk, and the probability of adverse outcomes for a particular portfolio. This is a really important part of our overall portfolio construction process, particularly when part of the objective is downside mitigation.

Description: A text banner appears stating What risk management strategies do you use to navigate through volatile markets? 

Darragh O’Dowd: We use a number of risk management strategies across the portfolios to navigate through volatile markets. Specifically, the equity allocation is diversified across risk management strategies that offer hard protection through the purchase of options or soft protection offered by the underlying investment strategy of the manager. 

Description: A text banner appears stating How does the options strategy work? 

Darragh O’Dowd: We use an equity colour on approximately 50% of the equity allocation within the portfolios. This involves buying put options to protect against downside events and funding the purchase of this protection by selling away upsides or selling call options. 

Description: A text banner appears stating Can you give an example of the soft protection offered by an underlying strategy? 

Darragh O’Dowd: One of the allocations is to our Global Tactical Fund, which looks to come out of the equity market at periods of market volatility to protect investors portfolios. 

Description: A text banner appears stating You have had considerable success in managing these strategies for European clients. What have you done differently with these portfolios to meet the needs to Canada investors? 

Darragh O’Dowd: The overall approach in terms of how we've designed these portfolios is very similar to how we design our own portfolios and our own multi-asset portfolios. But there is a number of key differences. Firstly, I think the interest rate environment. The interest rate environment within Canada if there's higher interest rates, and ultimately that leads to a higher allocation to fixed income and a lower allocation to alternatives, versus what we have within our multi-asset portfolios. I think secondly, there's a slightly different lens in terms of how we manage currency risk within these portfolios versus our own. There is a larger allocation to Canadian assets, both equities and fixed income within these portfolios versus our own portfolios. And that makes sense, given that the income and the outgoings of these investors are linked to Canadian dollars.

Description: A text banner appears stating Why do you think now is the right time to consider Canada Life’s Risk-Managed Portfolios for clients? 

Darragh O’Dowd: It can be hard for investors not to react during periods of market stress, to base investment decisions on emotional drivers. This can and has historically led to investors eroding value. Selling low and buying high. Outcome-orientated portfolios give investors a longer-term and focus, enabling them to weather those volatile markets. 

We would argue that outcome-orientated portfolios are appropriate for any investor who's at least as concerned about losing wealth as they are focused on creating wealth on. And although we are constructive on equity markets, there are risks. And these risks and challenges could lead to periods of excessive volatility as we move forward from here. And outcome-orientated portfolios provide a means for investors to navigate these periods of market volatility. 

Description: Text appears onscreen stating The views expressed in this video are those of the speaker and do not necessarily reflect the view of Canada Life or any other party. Nothing in this video is intended to be legal, tax or financial advice. 

Description: The Canada Life logo appears onscreen.