Asset Allocation
As OCIO Assets Grow, GIPS Standards Aim to Bring Consistency to Performance Reporting
Institutional clients increasingly seek to partner with outsourced providers who are GIPS compliant.
Reported by Matt Toledo
As the outsourced CIO industry has grown significantly over the past decade, industry observers note the increasing need for more consistent, standardized performance reporting and transparency to how performance is reported.
The OCIO market has grown from $1 trillion in 2015 to more than $3.3 trillion in 2024, according to data from Cerulli Associates, who estimates the industry to grow to $5.6 trillion by 2029.
“As OCIO has grown to four or five trillion, [asset owners] want transparency,” says Brad Alford, founder of OCIO search firm Alpha Capital Management. “One of the most important things they want is reliable, verified, audited performance, and that’s where GIPS came into play.”
The Global Investment Performance Standards were launched by the CFA Institute in 1999 and revised in 2025 to create a single international set of guidelines. In 2024, the CFA Institute introduced a Guidance Statement for OCIO Portfolios; the standards for OCIOs were effective December 2025.
In September 2023, only one quarter of OCIO firms claimed compliance with GIPS standards, according to data from governance and compliance adviser ACA Global. Adoption was low largely because these firms found that existing standards did not fit their business models.
One of changes to performance reporting by OCIO providers according to the finalized guidance is the introduction of required OCIO composites—standardized performance groupings for liability-focused and total return portfolios.
Additionally, OCIO firms must report their time weighted gross and net returns, which can give clients a better view of performance before and after fees.
The CFA Institute, in a report last year, noted that one of the reasons OCIOs are taking different approaches in reporting returns to clients, building on the issue that not all OCIO mandates are the same, and neither are the underlying clients. Those differences can make comparisons across providers difficult.
“One of the complexities in the OCIO market is that performance comparisons are rarely apples to apples,” says Cassandra Virgin, co-head of BlackRock’s OCIO client business. “We know mandates differ, there [are also] policy benchmarks that differ, lots of things may differ from legacy assets, liquidity. … That said, the new GIPS guidance for OCIO portfolios is creating a push for more standard comparisons, and that’s ultimately an important evolution in this market for performance evaluation.”
Alford agreed.
“Eight of the 10 largest firms are going to be GIPS verified by year-end, and that’s exciting for me, that I can, as a search firm, seek track records that I know are audited and verified,” he says, adding that some of his search clients are now only seeking to partner with OCIO providers that are GIPS compliant.
“The most ironic thing is the reason GIPS was created is because [historically] the OCIOs and consultants didn’t trust the money-manager returns and forced them all to go GIPS,” Alford says. “And now the table’s been turned, [OCIOs’] rationale [for not using GIPS] was GIPS wasn’t built for them, and so the CFA listened and said, ‘OK, we’ll build GIPS for you.’”
Mike Scotto, managing member at Highlight Advisors LLC, explains where the standards for OCIO can be useful.
“GIPS standards are a bit easier to implement for endowment and nonprofit OCIO mandates that have static benchmarks year after year. In the pension space, the allocations can change more frequently due to de-risking triggers, requiring more benchmark adjustments, and so there is added complexity,” says Scotto. “In the pension space, I’d say the gross and net fee comparisons are valuable for plan sponsors and the added transparency are likely to continue to drive fees lower.”