Two of the largest outsourced CIO providers, Willis Towers Watson and State Street Global Advisors, have joined a suite of indexes that tracks OCIO performance. Their addition brings to 46 the number of OCIO firms in the AlphaNasdaq OCIO Indices.
The indexes, launched in September 2019 as a partnership between consultant Alpha Capital Management and the Nasdaq exchange, use confidential data from the firms to gauge how they are doing collectively. The indexes cover 15 different types of investing programs, such as those focusing on health care or adopting a 60-40, stocks-bonds asset allocation.
As of a 2021 tally of their OCIO assets under management, State Street ($181 billion) and Willis ($168 billion) are No. 6 and No. 7, respectively. The leader is Mercer ($379 billion), a firm that does not appear on the AlphaNasdaq list; it couldn’t immediately be reached for comment.
The indexes collect data on returns and asset allocation from more than 1,100 institutions representing billions in assets, the press release announcing the State Street-Willis additions says. The broad-market AlphaNasdaq index returned 11.1% for the year ending last December, and the defined benefit pension benchmark was up 8.2% for the period. In a boffo year for stocks, the S&P 500 gained roughly triple those showings.
“The OCIO market continues to accelerate growth at an impressive pace,” said Tom Kennelly, head of OCIO investment strategy for State Street, in the release. “The broad interest from a variety of asset owners has increased the need for transparency and evaluation of performance among OCIO providers. While outsourced solutions are highly customized, the OCIO index provides another lens at which to objectively review performance.”
“It has historically been difficult for asset owners to compare OCIO results on an apples-to-apples basis,” said Nimisha Srivastava, North American head of investments for Willis.
“The growing number of contributors to the AlphaNasdaq OCIO Index highlights the importance of the data the indices provide to the institutional investment business,” said Alpha Capital Management founder Brad Alford.