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