We act as your in-house investment office, to help navigate difficult market environments and reduce operational burdens.
Nonprofit institutions face many challenges amid an increasingly complex investment environment. With limited resources, many organizations look to an outsourced chief investment officer provider to alleviate the challenges of traditional committee governance.
As a co-fiduciary, FEG OCIO provides extensive resources focused on improving the long-term outcomes of institutional investment programs.
Our OCIO services offer these core features:
FOCUS ON RESULTS
Portfolios are customized to meet client objectives and allocated to strive for both short- and long-term success.
We are dedicated OCIO professionals that bolster your internal talent with advisors, portfolio management, back-office, and research professionals.
We follow a disciplined decision-making process developed and executed by tenured professionals.
What is OCIO?
FEG OCIO complements your existing governance structure by supporting your internal talent—working collaboratively with stakeholders to gain a holistic understanding of your evolving needs. We believe that an OCIO partnership should provide a client experience that leverages resourcing, not outsourcing. Dedicated FEG OCIO advisor teams will provide guidance on strategic policies and optimize the portfolio in pursuit of client objectives.
Portfolio management and research professionals actively support each OCIO advisor team by sourcing new ideas and opportunities intended to enhance the portfolio, while robust client service, trading, and operational support teams fulfill your back office and administrative needs.
Whether you choose to outsource all or a portion of your investment portfolio, FEG OCIO can help.
- Holistic enterprise review
- Guidance on governance and investment policy design
- Setting long-term targets through strategic asset allocation
- Donor development support
- Client-focused education and events
- Consistent risk management and portfolio monitoring
- Consolidated performance reporting and data aggregation
- Spending policy methodology and analysis
- Investment manager selection and implementation
- Opportunistic positioning and rebalancing
The changing investment landscape, the need to balance competing goals across multiple pools of assets, and the expectation of a portfolio that considers the entire enterprise are just a few factors contributing to the growing intricacies of managing an investment program.
An outsourced CIO can help address these challenges through expertise in asset allocation and manager selection, greater breadth of investment options, and the deep industry knowledge and resources that come with an institutional provider. The OCIO model does not mean giving up control, but rather focuses committee time on the strategic goals of the organization while your outsourced CIO provider manages the labor-intensive tasks of implementation and ongoing monitoring to help meet your long-term objectives.
Discretionary portfolio management, which began in the 70s and 80s, started growing in popularity after the 2000 technology bubble collapse and 2008 Great Financial Crisis. According to a recent white paper from Cerulli Associates and BlackRock, strong growth in the OCIO industry is expected to continue—from approximately $1.1 trillion in U.S. assets under management in 2019 to nearly $1.7 trillion by 2023.
Why Organizations are Moving to the OCIO Model
The reasons to seek an
outsourced relationship are compelling.
In the 2020 aiCIO Outsourced Chief Investment Officer Survey, organizations cited the following reasons for selecting an outsourced relationship:
- Lack of internal resources
- Need to increase returns
- Better risk management
- Desire for strategic partnership
- Additional fiduciary oversight
- Cost savings
- Faster implementation
Types of Providers
Given the popularity of OCIO, various types of providers have emerged. The three primary backgrounds include: investment consultant, money management firm/large bank, and boutique/dedicated OCIO providers. Not all outsourced CIOs fall neatly into one category, however, and each type has inherent strengths and weaknesses, as outlined in the following graphic:
|INVESTMENT CONSULTANT||MONEY MANAGEMENT/ BANKS||BOUTIQUE/ DEDICATED OCIO|
Data sources: Cerulli Associates, FEG
FEG has been providing OCIO services to our clients for over 15 years and our heritage has been tied to traditional investment consulting for over 30 years. This rich history empowers us with these core strengths:
- Commitment to client service beyond investments; guidance on a wide range of industry issues
- Robust research team across asset classes and manager styles that sources ideas globally
- Desirable client base affords access to capacity-constrained investments and fee negotiations
- Deep bench of operational and trading professionals available to handle daily client needs
Portfolio design also differs among OCIO providers. While many claim to offer custom portfolios, the level of customization can vary considerably. OCIO providers operate investment models which range from mostly standardized to fully customized and generally fall under one of three types: a single portfolio, asset class sleeves, or fully customized accounts.
At FEG, we believe our clients benefit most when their investment program fits both the short- and long-term needs of their institution. Therefore, we offer flexibility and customization for each client’s portfolio at both the asset allocation and manager level.
True flexibility and customization in your portfolio at both the asset allocation and manager level can benefit you by:
- Clearly defined risk objectives managed within the portfolio
- An ability to fully integrate ESG, SRI, or other responsive investing solutions
- Portfolio construction that is specific to short-term spending and long-term growth
- Portability with the account, as the institution owns the underlying investments
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