The Advantages of an OCIO for Alternative Investment Management
A deep understanding of various markets and strategies, coupled with expert financial acumen, is essential to unlock the potential of alternative investment opportunities. This is where the role of an OCIO becomes vital. While investing in alternative investment strategies can contribute greatly to a well-performing investment portfolio, having a deep understanding of the investment strategies, access to well-vetted asset managers and skills in operations is essential.
“OCIOs provide improved governance and access, as well as the ability to be dynamic in periods of volatility,” says Bryan Ward, Senior Partner, Head of Solutions and Sales at Aon. “In many cases, asset owners don’t have the bandwidth to be able to structure, implement and, at times, react in a way that the market requires to manage the additional complexity of an alternatives allocation.”
An OCIO Can Help Realize a Portfolio’s Full Potential
As asset owners continue to expand their portfolios’ spectrum of investment opportunities, an OCIO structure can help facilitate effective implementation. In today’s markets, it’s critical to not limit a portfolio’s potential based on the capabilities or bandwidth of an existing process, but instead, work with the right partner to achieve a strategy’s full potential.
What to Look For in an OCIO
Skills needed to manage an allocation to alternatives include:
- Identification and access to the top managers
- Ability to structure portfolios, such as pacing schedules and strategy diversification
- Familiarity with different vehicle types
- A strong operations team to manage distributions, calls and other aspects, such as year-end audits
Beyond alternative investments, an OCIO should offer a consultative approach that partners with organizations to understand and execute on its overall investment goals. Incorporating both traditional and alternative investment options can contribute to a sound investment strategy and the ability for asset owners to achieve their long-term objectives.