The growth of OCIO
April 10, 2018

The growth of OCIO

As institutional investors combat an increasingly complex and expanding list of strategic issues, a growing number are turning to outsourced Chief Investment Officer (OCIO) providers to access investment expertise and secure better investment outcomes, says Greenwich Associates. This shift has major implications for asset management industry and for institutional investment portfolios. 

OCIO was once limited to small or mid-sized institutions that felt they lacked the size and resources needed to effectively manage their investment portfolios. However, a new report from Greenwich Associates, Winning in the New World of Outsourced CIO, finds that larger institutional investors are now embracing OCIO. 

"OCIO converts are getting larger and more complex. We expect this trend to continue," says Christopher Dunn, Greenwich Associates Vice President and author of the new report. "Also, greater regulatory oversight is a distinct possibility in the future, and the topic of fee compression is never far away."

The Greenwich Associates report analyzes the evolution of the OCIO market, identifies the three major types of OCIO providers - independent OCIO firms, investment consultants and asset managers - and provides detailed advice to each group about how to achieve long-term success in the fast-changing world of OCIO.

Greenwich Associates says its research confirms that funds change their asset allocation considerably when turning to OCIO. This presents an opportunity for managers who are able to bring greater sophistication to the table. In comparing the allocation decisions of current OCIO users to more independent, like-sized peers with under $500 million in assets, there are several notable differences.

For one, OCIO users show a noteworthy shift away from the most liquid asset classes. In fact, average active US equity allocations for OCIO funds are 27 percent, compared to 32 percent for peers of similar size.

Likewise, OCIO funds are reallocating these assets up the risk-return spectrum, as evidenced by their more globalized portfolios. Greenwich Associates research shows that mean active international equity and fixed-income allocations within OCIO portfolios sit near 25 percent, while like-sized institutions average only 17 percent.

For many asset managers, the OCIO channel is becoming too attractive to ignore. However, to increase distribution through OCIO providers, asset managers must be able to navigate the organizational complexity of the channel, increase the sophistication of their engagement, and deliver top-notch, client-centric service. "This difficulty is certainly exacerbated by the various shapes and sizes taken by OCIO providers," says Christopher Dunn. "Between independent platforms, investment consultants and competing asset managers, there is no one-size-fits-all approach to engaging with these providers."

 





This site, like many others, uses small files called cookies to customize your experience. Cookies appear to be blocked on this browser. Please consider allowing cookies so that you can enjoy more content across fundservices.net.

How do I enable cookies in my browser?

Internet Explorer
1. Click the Tools button (or press ALT and T on the keyboard), and then click Internet Options.
2. Click the Privacy tab
3. Move the slider away from 'Block all cookies' to a setting you're comfortable with.

Firefox
1. At the top of the Firefox window, click on the Tools menu and select Options...
2. Select the Privacy panel.
3. Set Firefox will: to Use custom settings for history.
4. Make sure Accept cookies from sites is selected.

Safari Browser
1. Click Safari icon in Menu Bar
2. Click Preferences (gear icon)
3. Click Security icon
4. Accept cookies: select Radio button "only from sites I visit"

Chrome
1. Click the menu icon to the right of the address bar (looks like 3 lines)
2. Click Settings
3. Click the "Show advanced settings" tab at the bottom
4. Click the "Content settings..." button in the Privacy section
5. At the top under Cookies make sure it is set to "Allow local data to be set (recommended)"

Opera
1. Click the red O button in the upper left hand corner
2. Select Settings -> Preferences
3. Select the Advanced Tab
4. Select Cookies in the list on the left side
5. Set it to "Accept cookies" or "Accept cookies only from the sites I visit"
6. Click OK

The growth of OCIO

As institutional investors combat an increasingly complex and expanding list of strategic issues, a growing number are turning to outsourced Chief Investment Officer (OCIO) providers to access investment expertise and secure better investment outcomes, says Greenwich Associates. This shift has major implications for asset management industry and for institutional investment portfolios. 

OCIO was once limited to small or mid-sized institutions that felt they lacked the size and resources needed to effectively manage their investment portfolios. However, a new report from Greenwich Associates, Winning in the New World of Outsourced CIO, finds that larger institutional investors are now embracing OCIO. 

"OCIO converts are getting larger and more complex. We expect this trend to continue," says Christopher Dunn, Greenwich Associates Vice President and author of the new report. "Also, greater regulatory oversight is a distinct possibility in the future, and the topic of fee compression is never far away."

The Greenwich Associates report analyzes the evolution of the OCIO market, identifies the three major types of OCIO providers - independent OCIO firms, investment consultants and asset managers - and provides detailed advice to each group about how to achieve long-term success in the fast-changing world of OCIO.

Greenwich Associates says its research confirms that funds change their asset allocation considerably when turning to OCIO. This presents an opportunity for managers who are able to bring greater sophistication to the table. In comparing the allocation decisions of current OCIO users to more independent, like-sized peers with under $500 million in assets, there are several notable differences.

For one, OCIO users show a noteworthy shift away from the most liquid asset classes. In fact, average active US equity allocations for OCIO funds are 27 percent, compared to 32 percent for peers of similar size.

Likewise, OCIO funds are reallocating these assets up the risk-return spectrum, as evidenced by their more globalized portfolios. Greenwich Associates research shows that mean active international equity and fixed-income allocations within OCIO portfolios sit near 25 percent, while like-sized institutions average only 17 percent.

For many asset managers, the OCIO channel is becoming too attractive to ignore. However, to increase distribution through OCIO providers, asset managers must be able to navigate the organizational complexity of the channel, increase the sophistication of their engagement, and deliver top-notch, client-centric service. "This difficulty is certainly exacerbated by the various shapes and sizes taken by OCIO providers," says Christopher Dunn. "Between independent platforms, investment consultants and competing asset managers, there is no one-size-fits-all approach to engaging with these providers."

 



Free subscription - selected news and optional newsletter
Premium subscription
  • All latest news
  • Latest special reports
  • Your choice of newsletter timing and topics
Full-access magazine subscription
  • 7-year archive of news
  • All past special reports
  • Newsletter with your choice of timing and topics
  • Access to more content across the site