The outsourced chief investment officer business is growing, and everyone wants a piece of it. For established providers like NEPC and Amundi, that means making changes to keep up with the competition.
On February 1, NEPC announced that it hired Troy Saharic, an ex-Mercer executive, as director of new business development. His first order of business? Reviewing and improving NEPC’s OCIO business.
Days later, on February 4, Amundi announced the creation of an OCIO division, with Laurent Tignard, formerly head of multi-asset institutional solutions, appointed as its leader.
Both firms have been in the OCIO business for a while, with at least $45 billion each in OCIO assets under management. As the OCIO industry has grown and gotten more competitive, it has become necessary for these firms to review their business practices so that they can find new ways to reach the market.
According to Steve Charlton, director of consulting services at NEPC, the growth of the industry spurred internal reflection.
“We see it across the board in ways that make us sit up and say, ‘Hey, are we doing the right thing?’” Charlton said by phone. “’Are we paying attention to this in a way that is positively reflected in the marketplace?’”
Charlton said NEPC addressed this need by hiring Saharic, who will help the company bring on new business and sales. According to Dennis Sugino, founder of OCIO consultancy Kansa Advisory, it “makes sense” that outsourced-CIO providers like NEPC are adding marketing capabilities.
“Hedge funds did the same as their market matured,” he said by email.
Over the past three or four years, Charlton said that NEPC had spoken with a lot of salespeople who were good at their jobs — but who weren’t what the company was looking for, because they didn’t have enough knowledge about the OCIO business. Saharic, a former OCIO leader at Mercer, was a good fit because of his experience in sales and consulting, he said.
Speaking to II by phone, Saharic said that NEPC “has been successful in what they’ve done” so far with the OCIO practice. “We want to be thoughtful in our growth and want to become more disciplined in our approach,” he added.
For Amundi, an OCIO reboot has meant restructuring its multi-asset investment platform. The massive European firm has been offering OCIO services through Crédit Agricole Group companies for the past 30 years and has been offering these services externally since 2009.
One major highlight of the OCIO platform is Alto, Amundi’s technology platform, according to Matteo Germano, head of the firm’s multi-asset investment platform.
“It's like what BlackRock has done with Aladdin,” Germano said by phone, adding that Amundi will be offering the technology to its OCIO clients.
While the services Amundi offers won’t change, the firm is creating a more structured approach to outsourced investment management.
“The plan is to keep on growing,” Germano said. “We do have the internal resources that we have redeployed already.”
He added that the firm has a new hire for its OCIO team in the works, but he said he could not yet share details on the position.
NEPC is also focusing on growing. While the firm is not actively pursuing a deal, a merger or acquisition is not off the table, according to Charlton.
“If the right small business like a consultancy or OCIO presented us where the opportunity made sense, you shouldn’t be surprised [if an acquisition] happened,” he said. “It would really have to be the right opportunity.”