June 29, 2020
Managers say more asset owners seeing benefits in rough markets
The strong growth of OCIO assets in the year ended March 31 likely will accelerate as institutional investors evaluate their funds' performance during the market turmoil in the first quarter and elect to outsource portfolio management, said OCIO managers and industry observers.
Worldwide assets managed with full or partial discretion by outsourced CIOs for institutional investors rose 5.8% to $1.96 trillion in the year ended March 31.
By comparison, worldwide OCIO assets under management with full or partial discretion rose 4.7% in the year ended March 31, 2019, data from Pensions & Investments' annual surveys of OCIO managers showed.
Over the five-year period ended March 31, growth of worldwide OCIO AUM run with full or partial discretion was up 51.1%.
For periods ended March 31, worldwide OCIO assets managed with full discretion grew by 10.7% in the year to $1.5 trillion and by 72.2% over five years.
The same three OCIO managers continue to top P&I's ranking by worldwide assets managed with full/partial discretion, but the order shifted this year.
Mercer LLC, New York, retained the top spot with $260.5 billion, up 13.3% in the year ended March 31. Aon Investments USA Inc., Chicago, unseated Russell Investments Group LLC, Seattle, from the No. 2 spot with $172.2 billion, a 2.7% increase over the previous year.
Russell's worldwide OCIO AUM declined 5.3% to $161.9 billion in the year ended March 31 and moved the firm down to No. 3.
Money managers' total worldwide outsourced assets (including discretionary and non-discretionary assets) totaled $2.32 trillion as of March 31, up 8.4% over the year and up 53.9% over five years. Internal investment staff of defined benefit and defined contribution plans, endowments and foundations as well as their bosses are looking at outsourcing as a solution to improve both performance and outcomes, sources said.
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