Outsourced Chief Investment Officer: A Comprehensive Guide

What is outsourced chief investment officer?
An Outsourced Chief Investment Officer (OCIO) model enables an organization to delegate responsibility for the day-to-day management of its investment program. Speci?cally, it involves shifting discretionary investment responsibility for some or all investment functions from the asset owner to an investment advisor.
Read more on www.pnc.com

A professional service known as an outsourced chief investment officer (OCIO) offers investment management and advising services to institutional investors including pension funds, endowments, and foundations. An OCIO operates as a fiduciary on behalf of its clients, developing personalized investment plans and continuously monitoring their implementation. An OCIO’s main goal is to reduce risk while assisting clients in achieving their long-term financial goals.

As a result, a deputy chief investment officer (DCIO) serves as the CIO’s second in command and may be in charge of creating investment strategy, overseeing investments, and managing investment teams. A DCIO may also be in charge of monitoring outside managers to make sure they follow the institution’s investing policies and regulations.

An in-depth analysis of the provider’s organizational structure, risk management procedures, investment methodology, performance history, and fee structure is required when evaluating an OCIO. Selecting an OCIO provider that is compatible with the institution’s investment philosophies, risk appetite, and investment goals is crucial. Institutions should thoroughly investigate potential OCIO providers, which should include reference checks, site visits, and key employee interviews.

Over the past ten years, the OCIO business has expanded dramatically as more institutional investors outsource their investment management tasks to outside companies. Assets under management (AUM) for the global OCIO industry are anticipated to reach $1.9 trillion by 2020, according to a report by Cerulli Associates. According to the report, the market is anticipated to expand further as more institutions look to streamline their investing processes and concentrate on their core capabilities.

Another sort of investment management service that resembles an OCIO is fiduciary management services. For institutional investors, fiduciary management companies act as a delegated investment manager and are in charge of making investment choices. The services offered by fiduciary management companies often cover a wide range, including manager selection, portfolio creation, risk management, and continuing monitoring and reporting.

In conclusion, institutional investors wanting to outsource their investment management duties can benefit from an OCIO. Choosing an OCIO provider that is compatible with the institution’s investment philosophies, risk appetite, and investment goals is crucial. The evaluation of potential OCIO providers must be thorough, and institutions should think about fiduciary management services as a possible replacement for OCIO. As more institutions look to streamline their investing processes and concentrate on their core competencies, the OCIO market is anticipated to expand.