OCIO providers expect small- and mid-sized clients to drive future growth

27 January 2014   Category: News, Asia, Global   By Asia Asset Management

Outsourced chief investment officer (OCIO) providers expect small- and mid-sized clients to drive future growth, according to a new study from global analytics firm Cerulli Associates.

"There are many reasons why an institution would choose an OCIO mandate," explains Alexi Maravel, associate director at Cerulli. "Institutions frequently cite a lack of resources or a greater interest in sharing fiduciary responsibilities. Another reason mentioned more frequently post-financial crisis is the need for faster decision-making and implementation of those investment decisions."

Cerulli's first quarter issue of The Cerulli Edge - Institutional Edition explores institutional investors' increasing delegation of investment discretion to investment consultants, as well as dedicated providers' reign among non-profits. 

"Much of the long-term growth in the OCIO market is expected to come from non-pension clients with less than US$500 million in assets," Mr. Maravel adds.

"A broader array of institutions with significant pools of assets will increasingly call upon asset managers to take on greater responsibilities, implement more complex strategies, and better align their interests with that of the institution in a more objectives-based approach," Mr. Maravel continues. "Asset managers need to consider their level of preparedness to address asset owners besides defined benefit plans."

Cerulli asserts that managers of all sizes need to evaluate their resources and determine their niche to be well positioned for the growth of the OCIO market.