The CFA Institute’s recently released guidance to standardize performance reporting for outsourced chief investment officer portfolios has sparked a range of reactions.

Many in the industry view the guidance as a positive move toward greater transparency and consistency for the rapidly growing $3 trillion OCIO industry. But others say the guidance comes with challenges, particularly for smaller or boutique firms.

The guidelines aim to align OCIOs with Global Investment Performance Standards, which the CFA established for asset managers. Starting December 31, 2025, OCIOs managing asset owner portfolios will be required to follow standards for composites, fee disclosures, benchmarking, and treatment of legacy investments.

Without standards, OCIOs can choose how to calculate and present performance to investors.

“Asset owners will finally be able to compare OCIOs and their track records. It’s not expensive and really easy to do,” said Brad Alford, founder of Alpha Capital, calling these guidelines “one of the biggest changes in the OCIO market’s history … creating a real, positive change for the industry.”

Strategic Investment Group's Joshua O'Brien, which was a member of the CFA Institute's working group that came up with the standards, said in an email that many OCIO providers would historically show their performance figures “in the best possible light, such as by using representative clients or hypothetical total portfolios using asset class performance.” But this “did not always offer prospective buyers an accurate view of the OCIO's actual track record.”

“The OCIOs had no incentive to limit how they showed returns,” O'Brien added. “This, along with the overall complexity and lack of guidance in areas such as legacy assets, contributed to the slow adoption of more transparent industry standards.”

As Institutional Investor reported in 2019, the OCIO industry has long faced criticism for its lack of standardized performance benchmarks, with some likening it to the “Wild West” of investment management.

ACA Group Director Elena McKee-Dabbs said during a webcast that OCIO firms have historically received “inconsistent requests from asset owners and search consultants about their performance reporting,” which in turn has led search consultants to receive “a variety of different types of performance [reporting] from OCIO firms that are hard to compare.”

Over the last few years, consultants and industry groups like the CFA Institute began exploring frameworks to improve transparency and comparability across OCIO providers. The initiatives were designed to help institutions better evaluate their OCIO options.

Still, some have concerns. Even though O’Brien argued that the standards will promote greater consistency and comparability of performance records among providers, he expressed “concerns regarding the required composite structures within these new standards, especially for boutique OCIO firms with fewer clients, as they may unintentionally limit flexibility.”

Meanwhile, even as she welcomed the standards as positive “baby steps” in the right direction, Chestnut Advisory Group’s Amanda Tepper said there could be “unintended consequences” for applying “an approach designed for standardized products to a world of fully customized products.” Tepper added that there’s more to an OCIO provider than how much alpha it can deliver.

Tepper’s partner Ravi Venkataraman told Institutional Investor that while “broadly supportive” of the standards as “an effort in the right direction,” their widespread adoption risks excluding capable OCIO providers that choose not to adopt them.

“Some search consultants won’t consider anybody who doesn’t adopt these standards,” Venkataraman said, warning that this “all-or-nothing” mindset oversimplifies evaluations and overemphasizes the guidelines, which fail to reflect the full range of OCIO services.

Venkataraman also noted that the new performance standards could dominate OCIO selection, creating an "illusion of certainty" while ignoring many aspects of OCIO services that benchmarks cannot capture.

The new guidance clarifies and expands definitions, including those for OCIO, discretionary, and composites. However, Angeles Investments CIO Michael Rosen noted that while “moving toward a reporting standard is desirable,” gaps remain. For instance, the guidance provides “no recommendation for how to classify hedge funds” and “dropped the requirement to disclose every fee,” which Rosen believes should have been retained.

“Reporting standards will never be perfect or satisfy everyone and will continue to evolve,” Rosen added. “This is a step in that evolution.”