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A Year in Surveys

In our surveys throughout the year, asset owners let their voices be heard on topics such as outsourcing, transition management, and LDI. As we wrap up 2017, here’s a...

In our surveys throughout the year, asset owners let their voices be heard on topics such as outsourcing, transition management, and LDI. As we wrap up 2017, here’s a look back at your responses, suggestions, and highlights from the results.

2017 Outsourced Chief Investment Officer Survey

The year saw larger growth for the big fish in the OCIO pond, while the smaller fish expanded in smaller quantities. Although endowments saw a rocky 2016, 74% of respondents reportedly increased the dollars spent from their endowments—an 8.1% increase from last year. Of the 148 respondents, 40% outsource or plan to outsource within the next two years, down 40% from the previous year. “Experience of top management” (93%) was the number one reason for choosing outsourcing firms. More than six in 10 outsourcing asset owners do so for 100% of their portfolios—68% in the under-$500 million category, and 100% in the $500 million to $1 billion category.


Reasons for Outsourcing

  CRITICAL IMPORTANT NOT VERY
IMPORTANT
NOT AT ALL
IMPORTANT
NOT
APPLICABLE
Better risk
management
32% 56% 5% 0% 7%
Cost
savings
18% 40% 25% 3% 14%
Lack of
internal resources
58% 33% 3% 0% 6%
Additional
fiduciary oversight
43% 38% 8% 3% 8%
Need to
increase returns
28% 46% 13% 5% 8%
Faster
implementation/
decisions
20% 43% 23% 8% 6%
Desire for
strategic
partnership
23% 33% 23% 13% 8%

View Survey

2017 Transition Management Survey

Our sixth annual Transition Management survey saw 57% of respondents perform more transactions, as well as increase the number of transitions for the year by 5%.

Of the 234 respondents, 75% reported they “completely trust the industry,” up from 59% in 2016. Participating organizations conducted an average of 6.4 transactions (including legacy and target). At 55%, “manager performance” was again the main reason transitions were conducted, down 1% from 2016. In addition, 58% of respondents did not use consultants to advise them in the transitions—a 1% increase from the previous year. Most respondents (32%) also noted that two transition managers are usually considered for each transaction. In terms of benchmarks used to gauge transition costs, implementation shortfall increased by 12% at 80%. In 2017, 90% of respondents reported they “always” require a transition management agreement to govern the transitions, up 12% from last year. The leading security transitioned was again US equities, which stayed flat at 84%.


What was the reason for conducting your transition(s)?

2016 2017 1-Yr Change 6-Yr Change
Manager Performance 55 54 -2 9
Change in manager personnel/
structure
27 30 10 28
Asset allocation shift 35 38 8 -37
Rebalance 22 28 30 4
Restructure of your fund 29 42 43 9
Change in fund/manager benchmark 10 5 -48 -64
Cash flow, in or out 11 21 84 120
Other 5 15 182 79

View Survey

2017 Liability Driven Investment Survey

The trend of pension risk-transfers and freezes continued in 2017, leading to 64% of respondents with an endgame to manage/de-risk their plans, up 6% from 2016. Endgames offering lump sums were at 35%, while 32% of respondents said buyouts were the endgames for their plans. The goal to keep plans open improved by 9% to 25%, and pension freezes went down 2% from 2016. On average, 2017 respondents have 52% of their portfolio in LDI strategies, up 5% from 2016.


Current Plan Status

  OPEN TO NEW
ENTRANTS AND
ACCRUALS
FROZEN CLOSED TO
NEW ENTRANTS,
STILL ACCRUING
ALL 2017 RESPONDENTS 28% 38% 34%
>$15B 28% 38% 34%
$5B – $15B 30% 19% 51%
$1B – $5B 28% 52% 20%
$500M – $1B 17% 42% 42%
<$500M 36% 43% 21%
current-plan-status

View Survey


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