Leaving Asset-Owning Behind

After eight years of exponential growth in the outsourced-CIO sector, investing talent is following.

The list is extensive. Over the last two years, CIO has reported on more than a handful of asset owners’ migrations to the outsourced-CIO (OCIO) model. In August 2016, the ex-CIO of Southern Methodist University joined Fund Evaluation Group’s OCIO arm; in June, DTE Energy’s investment chief Paul Cavazos left for American Beacon Funds; last November, Harvard endowment Vice President Jameela Pedicini took a job at Perella Weinberg; that September, Alaska Permanent Fund’s Jay Willoughby scored the coveted CIO role at the Investment Fund for Foundations… And that’s just the beginning. 

After more than eight years of exponential growth in the OCIO sector—including an 860% rise in discretionary assets and 2,189% jump in clients, according to CIO’s 2016 OCIO survey—it comes as no surprise that investing talent is following. 

So for asset owners eyeing one of these mouthwatering jobs at OCIOs, here are a few tips—from those who have already defected.

“It’s an exciting space to be in,” begins Bola Olusanya, who joined Strategic Investment Group after leaving Vanderbilt University’s endowment more than a year ago. “Many people are either starting their own OCIO shop or joining an existing firm—I think it’s a natural progression for people in the endowments and foundations space.” Olusanya spent more than seven years at Vanderbilt as managing director acting as “a jack of all trades” for the $4 billion endowment. At Strategic, he specializes in public equities portfolios. “I’m most excited about the breadth of clients I deal with—and the depth of experience that comes with it. And the talent is so much richer.” 

It’s also this boom in resources that drew Bei Saville to OCIO after five years leading alternatives at the Leona M. and Harry B. Helmsley Charitable Trust. When she made the switch last year, her team grew from 12 at the Helmsley Trust to 130 at Northern Trust where she runs the endowment and foundation program as CIO. “As an in-house asset owner I was a one-man band,” she says. “Now with a larger team and a broader platform, my role has significantly shifted. I conduct the orchestra.”

CIO916_Portrait-SH2-JooHee-Yoon.jpgArt by JooHee YoonHowever, the wide range of resources and clients are not without serious challenges. “It’s no longer one pool of capital with a long time horizon,” explains Suzanne Streeter, now senior principal for US private markets investments at Partners Capital. This means being more cautious with risk, she continues—and more importantly, being able to sell your investment ideas to a number of stakeholders. “There’s a marketing element to the job,” she says. “You can have conviction about an opportunity, but if you can’t convince your clients, it’s not going to work. It’s challenging to do this with so many constituencies. This level of fiduciary responsibility can prohibit you from moving quickly.”

Throw in a variety of objectives, risk-return goals, and constraints to the equation, and you get an “intellectual stimulation,” says Taylor Henshall, now-investment director at Strategic Investment Group after more than eight years at Brown University’s endowment. “Having multiple clients can create more problems to solve when you’re putting together the portfolio. It can be a more complicated and challenging series of questions as well.” For those who welcome problem-solving—and compensation that rivals, if not exceeds, endowments and foundations—we suspect the list of migrations will soar in a year’s time. 

By Sage Um