Considering an Outsourced CIO

a strategic partnership for your organization

Choosing the right Outsourced Chief Investment Officer (OCIO) is crucial, going beyond investment management to align with your organization's values and strategic goals. It's vital to ask insightful questions to understand a potential OCIO's approach, ensuring they can not only manage investments effectively but also support your institution's mission and adapt to a changing landscape. The ideal OCIO becomes a strategic partner, crucial for mutual success.

Read "Six Key Questions to Ask OCIO Providers"
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What should you look for in a potential OCIO provider?

Do they look beyond your investments?

  • An OCIO should look beyond a narrow risk/reward profile and investment the investment portfolio.

  • An OCIO should take the time to understand your strategic business goals, challenges and the role investments can play in overall organizational success.

In what market do they specialize?

  • The right OCIO for your company will have experience in your specific market.
  • Not all financial players have experience in every market – such as the not-for-profit industry – which has its own specific nuances.

Does policy design go beyond investments?

  • A truly collaborative OCIO will address other components of policy design, including operational, investment and budget policies.
  • A 360-degree evaluation process will pay dividends in terms of helping your institution achieve its objectives.

Are they collaborative partners?

  • A truly holistic OCIO must be willing to collaborate with different areas and departments of your organization.

  • The relationship should extend from the boardroom to the back office, offering resources and capabilities that go well beyond investment management.

Are they thought leaders?

  • An effective OCIO should stay constantly on the cutting edge of market and industry trends, developing unique insights and thought leadership.

  • A forward-thinking OCIO not only monitors what’s happening today, but will also analyze, predict and adjust to future trends.

Will they construct a portfolio for you or is it a plug-and-play solution?

  • Your OCIO should recognize that the construction of the portfolio hinges on multiple factors such as long-term investing goals, liquidity needs, and other internal institutional mandates.

  • These and other key variables will dictate not only the components of the portfolio but of the overall investment program. For smaller institutions, there may be unique considerations as detailed here.

How much will it cost?

Investment Committees may overvalue fees while assessing OCIOs, thinking fees are an easy comparison metric. However, the industry's lack of transparency and consistency makes fee comparison difficult, leading to confusion about true costs and reasonable rates for services. While investors are aware that costs fluctuate based on various factors like investment amount and asset allocation, the inconsistent reporting of these costs among managers complicates matters. Understanding how fees are packaged is crucial, as hidden fees can adversely affect performance and lead to potential conflicts of interest.

Read "Top 5 Ways OCIO Fees Mislead"
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Key OCIO Evaluation Factors

These factors can serve as the framework for an organization's RFPs to gather relevant information,
adequately compare providers and ultimately make the choice that is right for your institution.

Exploration

Dive in here to uncover the essence of OCIO, understand why it's becoming the choice of many investors, and decide if it's the best fit for your organization.

Understanding if an OCIO is right for you

Transition

After thorough investigation, you're poised to transition to an OCIO. What's the best approach to crafting your RFP to maximize the benefits of this partnership? Alternatively, if you're already working with an OCIO but they're falling short of your standards, what steps should you take?

Transitioning to an OCIO

Interested in Commonfund OCIO?

Is your institution thinking of outsourcing?

Commonfund has been working with nonprofit investors to provide total portfolio solutions for over five decades and as a discretionary OCIO for over 20 years. We have learned that building a partnership is critical to the success of an organization, and different than a traditional consulting relationship.

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