The year ended March 31 was a strong one for OCIO managers, many of which had double-digit growth in assets under management thanks to a wave of new clients and strong performance.
The combination of buoyant market returns in the last three quarters of 2020 through the first quarter of 2021 and higher investment in OCIO strategies brought the industry to a new record total of $2.46 trillion in assets managed worldwide with full or partial discretion for institutional investors as of March 31, data from Pensions & Investments' latest industry survey showed.
Market returns were a significant driver of OCIO manager growth in the year ended March 31. The S&P 500 Total Return index was up 56.4% in the year ended March 31; AlphaNasdaq OCIO Broad Market index, up 30.7%; and Bloomberg Barclays U.S. Aggregate Bond index, up 0.7%. In sharp contrast, the S&P 500 was down 6.9% the prior year, the AlphaNasdaq OCIO index was down 3.4% and the Bloomberg Barclays U.S. Aggregate Bond index was up 8.9%.
Timothy J. Braude, managing director and global head of OCIO at New York-based Goldman Sachs Group Inc., said in an interview that in 2020 "our OCIO clients experienced a very fast drawdown and a very fast recovery. Equities were up 50% to 60%, and we and our clients had a very big year. 2020 was like a supercharged version of what we saw after the global financial crisis in 2008."
"The really rapid recovery gave investors a chance to step back and decide what they wanted to do about moving away from in-house portfolio management and into an OCIO arrangement," said Mr. Braude, adding that Goldman Sachs had "a very strong year" of organic OCIO growth in the year ended March 31.