(November 21, 2013) — The outsourced
chief investment officer (OCIO) movement is becoming the fastest growing
segment of investment consultants’ business, according to research from Cerulli
The Boston-based analytics
firm found consultants expect that OCIO business would comprise 18.5% of total
assets in 2016, up from an average of 12% at the end of 2012.
"Over the past decade,
institutional investors have been seeking more proactive advice and ceding
portfolio decision-making, as investment options have grown increasingly
complex and markets have become more volatile," Michele Guiditta,
associate director at Cerulli, said.
"A number of
institutional investors have opted for an OCIO arrangement, delegating
oversight and decision-making for all or part of their investment
The growth of OCIO business is
also considered to be among the biggest pressures facing consultants, with 73%
of them believing that the increased competition due to new entrants in the OCIO
space was a major or moderate threat to their future.
The full Cerulli report can
be found here.
Cerulli’s conclusions about
growth in the sector has been supported by the growth in size of fiduciary pots
within investment consultancies. Aon
Hewitt announced in October that 145 employers and their 220 pension funds
are now run by Aon in a fiduciary capacity, totalling $40 billion of assets
Mercer too had embraced the
OCIO trend: its UK fiduciary management business has grown by 31% in terms of
assets over the year to June, while Towers Watson reported that two-thirds of
its new business in the last year has been fiduciary.
published some strong results this month: the fiduciary manager published its
first five-year results, showing its clients outperformed their peers on a
liability base by 30 percentage points. It has challenged other OCIO firms to now
publish their clients’ results for comparison.
The Anglo-Dutch firm works
with more than 40 major European pension funds and insurance companies and in
the UK alone, Cardano works with pension funds with assets totalling £50
billion, of which £10 billion is managed on a fiduciary basis.
annual report into the UK fiduciary management industry found the assets
under fiduciary advisement topped £29 billion this year—equating to 2.6% of the
pensions market. Interest has particularly grown among smaller pension funds,
with 91% of the market now made-up by mandates less than £250 million in size.
Can OCIO’s unstoppable rise
continue? aiCIO’s European edition,
published in December, tackles what could bring the growth of outsourced
investment to a halt.
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