Outsourced Chief Investment Officer mandates are reshaping the UK fiduciary management landscape, with recent findings from Isio revealing that large-scale OCIO deals are driving a significant increase in AUM within the fiduciary management market.
While overall mandate growth across the fiduciary market has been subdued – partly steered by the number of schemes exiting the market following an insurance transaction – the rise of multi-billion-pound OCIO arrangements increased growth in AUM by one fifth (21%) between 2023 and 2024, prompting many trustees and sponsors to review their schemes governance structure.
Isio expect the number of OCIO mandates to rise as more schemes evaluate the suitability of their current investment governance model, particularly as circumstances evolve over time. In addition to the largest schemes in the market, Isio believe that more large schemes (often with assets greater than £1bn) will consider an OCIO approach as trustees and sponsors look to reduce governance burden and increase operational efficiency, whilst maintaining some level of control over the scheme’s investment decisions.
Source: Isio Fiduciary Management Survey 2024
Tailored solutions are driving greater market uptake
Previously seen as a solution suited predominately to the largest and most sophisticated schemes in the market, OCIO is now attracting interest from a broader group of pension schemes seeking bespoke solutions. Isio believe that more large schemes are now considering or implementing OCIO arrangements, often in response to operational strain, increasing regulation and the complexity of their investment portfolios.
Unlike traditional fiduciary management models, OCIO allows for a more tailored governance approach, typically including dedicated personnel and integrated servicing aligned to a scheme’s specific needs. This flexibility has made the model increasingly appealing to trustee boards who are re-evaluating in-house resources and looking to future-proof their investment governance solution.
Market conditions accelerate OCIO adoption
Increasingly strict regulation, volatile investment conditions and rising operational demand has only accelerated interest in OCIO solutions. Many trustees and sponsors are finding that OCIO offers a pragmatic middle-ground between advisory-led and fully delegated approaches, delivering efficiencies in decision-making and implementation without giving up meaningful oversight or total control of the scheme’s investment decisions.
Isio found that schemes are particularly drawn to the economies of scale that the OCIO model offers, as well as access to broader investment expertise and stronger operational support. Providers managing billions in assets can often secure more favourable fund terms and deliver faster, more consistent execution than through their existing model. This has been particularly evident in areas such as cashflow management and de-risking frameworks at later stages in a scheme’s journey.
Paula Champion, Head of Fiduciary Management Oversight at Isio, comments: “OCIO adoption is one of the most significant trends in fiduciary management. We are seeing a clear shift in how large schemes are approaching governance, with trustees increasingly recognising the value of a solution that combines strategic oversight with dedicated, responsive execution.
“The appeal of OCIO lies in its aim to bring together the best of both worlds, access to institutional-scale capabilities and deep investment expertise, without losing the flexibility and tailoring that schemes require. For many schemes, it’s 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. The market is evolving and OCIO is now playing a central role in helping schemes adapt, maintain control and deliver better outcomes for members.”
