Employers of All Sizes and Types Embracing OCIO Service

More and more institutions, including those with greater than $1 billion in trust assets to invest, have embraced full-discretion OCIO service, according to Cerulli Associates.

By John Manganaro | November 17, 2016
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A new report from Cerulli Associates, “U.S. Outsourced CIO Function 2016: Opportunities for Providers to Support Institutions Across Client Segments,” highlights the very strong growth experienced by outsourced chief investment officer (OCIO) providers in recent years.

The informative publication is actually Cerulli’s “first report focused on the OCIO market,” a fact that in itself suggests change in the OCIO landscape, including in market sizing, forces of growth, and demand and needs across client segments. In particular, Cerulli finds the segment of the market in which the OCIO provider actually takes discretion over client assets—as oppposed to just offering advice—has grown impressively, with such mandates doubling in volume to reach nearly $1.3 trillion over the past five years.

“The growth of the outsourcing market stems from increasingly complex and volatile capital markets, regulatory changes, resource constraints, and demand for improved governance,” Cerulli explains. “As a result, institutions seek timelier decision-making, deeper manager due diligence, and greater oversight of portfolio risks.”

According to Cerulli Associates, the vast majority (85%) of OCIO providers surveyed expect significant new business opportunities from institutions looking to move from an advice-only advisory relationship to a more discretionary OCIO solution.

NEXT: Much wider use of OCIO