Investment oversight committees are reorganizing the management of investments as assets under management increase.
The UK fiduciary management landscape is undergoing a significant transformation, with a 21% increase in assets under management (AUM) in the OCIO sector between 2023 and 2024 [1]. This shift is primarily driven by large-scale OCIO mandates, as trustees seek tailored, integrated solutions to navigate the complexities of regulatory pressures, market volatility, and operational demands.
Unlike traditional fiduciary management models, OCIO allows for personnel and integrated servicing tailored to scheme-specific needs. This personalised approach is increasingly valued by trustees, who are recognising the benefits of a solution that combines strategic oversight with dedicated, responsive execution [1].
Paula Champion, head of fiduciary management oversight at Isio, highlights the appeal of OCIO: "OCIO offers more efficient execution without surrendering control. It aims to bring together institutional-scale capabilities and deep investment expertise, without losing the flexibility and tailoring that schemes require" [1].
The UK-based pensions and investment advisory firm Isio reported this growth trend. According to Champion, the market is evolving, and OCIO is now playing a central role in helping schemes adapt, maintain control, and deliver better outcomes for members [1].
For many schemes, OCIO is an opportunity to enhance governance frameworks, streamline decision-making, and reduce the operational burden on internal teams. As regulation becomes more complex and internal resources continue to stretch, OCIO uptake is likely to accelerate further [1].
Access to economies of scale, broader investment expertise, and operational support are key factors in the appeal of OCIO for trustees. These schemes are seeking tailored governance models due to rising complexity, regulation, and operational strain [1].
OCIO adds value in cashflow management and de-risking frameworks, particularly for maturing schemes. Previously, OCIO was seen as a solution for the largest and most sophisticated schemes, but it is now attracting interest from a broader group of pension schemes [1].
In summary, the growth of large-scale OCIO mandates in the UK is mainly propelled by:
- Governance flexibility and operational efficiency gains through bespoke, integrated OCIO solutions.
- Stricter regulatory pressures increasing internal resource strain on pension schemes.
- Market volatility driving demand for expert investment management.
- Economies of scale and access to wider expertise offered by OCIO providers.
- Large pension schemes’ strategic shift towards reducing their governance and administrative burden while improving investment outcomes [1].
The growth in OCIO mandates is primarily driven by multi-billion pound arrangements from schemes with over £1 billion in assets. As these trends continue, it's clear that OCIO is becoming a significant trend in fiduciary management, with a clear shift in how large schemes are approaching governance.
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