OCIO Appetite Stronger Among Some Institutional Funds Than Others

Regardless of uneven appeal, the outsourced investment manager service model has been changing.

Nearly half (46%) of institutional asset owner organizations currently outsource, and 2% plan to do so in the next 12 months, according to the 2025 CIO Outsourced Investment Manager Survey.

The survey found that the type of organizations most likely to outsource or to consider doing so are union pensions (50%), endowments and foundations (50%), and corporate pensions (42%).

University endowments could lean further into relying on outsourced CIO providers, according to a report from Cerulli Associates, due to liquidity concerns, federal funding cuts and a new federal tax on realized investment gains. Among other things, the One Big Beautiful Bill Act, signed by President Donald Trump in July, requires certain private, post-secondary institutions—which includes endowment funds—to pay graduated taxes based on the value of their “net investment income,” on a per-student basis.

The sweet spot for portfolio size when respondents either outsource or plan to is $500 million through $1 billion, at 75% of organizations. About six in 10 organizations (63%) with less than $500 million in assets outsource or plan to, and 31% with greater than $1 billion in assets outsource or plan to.

Among all respondents, 58% give full discretion to their OCIO provider, and 42% give partial discretion. More than six in 10 respondents (62%) outsource 100% of their portfolios.

Regardless of whether there is an increased appetite for outsourcing investment management, OCIO providers seem to be preparing to up their game, hiring seasoned experts and enhancing operations. Franklin Templeton recently hired Mercer’s longtime OCIO head, and, last year, UPS’s move from exclusively using its internal team to predominantly using Goldman Sachs’ OCIO team portended an emerging trend for investment management of institutional funds.

Experts have said that outsourced CIO providers are adapting to new challenges as markets and sources of return shift and as technological advances become more sophisticated and expensive. They are using new technology and hiring specialists in growing investment areas.

To Outsource or Not to Outsource

According to the 2025 CIO Outsourced Investment Manager Survey, 53% of respondents indicated they do not outsource and have no plans to do so. Among those organizations, the top reasons they don’t outsource are satisfaction with returns produced internally, sufficient internal expertise and satisfaction with the speed of implementation.

The top reasons institutional asset owners do outsource are to make up for the lack of internal resources, to have better risk management and to have additional fiduciary oversight.

Nearly half (48%) of all respondents that outsource have conducted an evaluation of quality and fit of their current OCIO provider/s, and 20% plan to do so in the next 12 months. The top-ranked OCIO deliverables are investment performance; value for fees; and risk management and/or pension de-risking.

Respondents reported that, in addition to investment management, the most common things their OCIOs supply are governance best practices (59%), regulatory guidance (50%), and custom scenario analysis or enterprise risk management (41%).

—Rebecca Moore