As the outsourced chief investment officer industry continues to grow exponentially, new client assets are expected to surpass $5.6 trillion through 2029, which reflects a 10.6% average annual growth rate, according to a new report. 

In 2015, the OCIO industry gained about $1 trillion in assets; now, OCIO assets have tripled in size in under a decade to over $3.3 trillion by the end of 2024, which is mainly due to the attraction of investment consultants, asset managers, banks, and wealth managers, according to a new Cerulli Associates study. 

Over the next five years, roughly $1.3 trillion in new client assets are expected to boost the OCIO industry, with about 43.4% of the new assets expected to come from corporate defined benefit or contribution plans.  

Defined contribution plans are expected to triumph across all channels in OCIO flows over the next five years, with $294 billion, which follows corporate pension funds, with $248 billion in expected flows, Cerulli said. 

About 9.6% of all institutional assets, including private wealth, endowments and foundations, insurance accounts, corporate defined benefit, DC plans, and public defined benefit plans, will be managed by OCIOs, compared to 7.6% in 2024, according to Cerulli. 

“Looking ahead, competitive dynamics are anticipated to change,” Chris Swansey, associate director, said. “Larger OCIO providers will likely increase fee pressure on smaller competitors as assets concentrate among the largest providers. If organic growth opportunities eventually decline, large OCIO firms are expected to seek inorganic growth through acquisitions.” 

Smaller institutions are increasingly turning to OCIOs to help manage complexity and strengthen investment outcomes, with OCIO adoption at its highest among endowments with $100 million to $500 million in assets under management, and providers expect endowment clients to drive most of the industry’s growth over the next two years, a separate Cerulli study found.