OCIO’s Next Targets: DC and Public Sector

Research reveals that outsourced investment providers are targeting areas beyond their traditional stomping grounds.

Outsourced-CIO (OCIO) providers are plotting expansion into the defined contribution and public defined benefit sectors, according to research by Cerulli Associates.

In a report, “Investment Consultants 2015: Trends Reshaping the Investment Consulting Landscape”, Cerulli claimed that approximately one quarter of surveyed OCIO providers said these two areas would offer “significant growth opportunities” in the near future.

Michele Giuditta, associate director at Cerulli, said the main areas would be “large and mega plans that generally take a more customized, institutional approach to asset allocation.”

With public pensions, OCIOs are often providing specialist expertise in areas such as alternatives, Giuditta added.

“Given the multiple challenges that institutional investors are facing—stretched budgets, regulatory and accounting rule changes, underfunded pension liabilities, and more complicated and volatile markets—the opportunities for OCIOs are continuing to increase,” said Giuditta.

Despite the rapid growth of OCIO in recent years—Chief Investment Officer’s latest survey covered 56 providers—Cerulli predicted continued expansion, “albeit at a slower pace”.

Related: 2015 Outsourced-Chief Investment Officer Survey & The OCIO Power Base