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The CFA Institute has released its guidance statement for OCIO portfolios, which aims to develop a framework for outsourced CIO providers to comply with Global Investment Performance Standards, or GIPS.  

The framework follows an exposure draft guidance statement for OCIO standards, published in September 2023, and a public comment period which lasted from September to November 2023. The guidelines will be effective December 25, 2025, for firms that claim compliance with the GIPS standards. 

Worldwide, OCIO providers manage more than $3 trillion in assets, and that number is set to continue to grow. Cerulli Associates expects the OCIO industry to manage more than $4 trillion in assets by 2028, driven, in particular, by demand from endowments and foundations.  

The guidance statement considers firms that are an OCIO provider and subject to the guidelines if they provide both strategic investment advice and investment management services to clients.  

A firm which provides one service but not the other will instead follow the existing GIPS Standards for Firms. Additionally, the guidelines for OCIO portfolios applies to providers that manage all of a portfolios’ investment mandate; for example, if a provider only manages one asset class in a client portfolio, this firm would follow the GIPS Standards for Firms, rather than the new OCIO guidance.  

The guidance includes standards for OCIO composites, fee schedule disclosures, use of asset allocation ranges, distribution of GIPS reports to clients and benchmark selection. 

The guidance also includes a section addressing how firms managing OCIO portfolios should account for performance of legacy assets “that they might wish to sell but may not be able to sell on a timely basis or even on a longer-term basis.”  

The guidance gives firms managing portfolios including legacy assets three options for determining which OCIO portfolios are considered discretionary and will be included in a required OCIO composite, and says firms must “establish a composite-specific policy for the treatment of legacy assets and apply the policy consistently.” 

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The options are:  

• Exclude OCIO portfolios from composites portfolios with legacy assets when the legacy assets materially affect the ability of the firm to implement its intended strategy. A firm may consider the amount of legacy assets and type of legacy assets when making this determination. 

• Include OCIO portfolios in composites portfolios with legacy assets, regardless of the amount or type of legacy assets, because the firm determines that it can manage these portfolios to its intended strategy. 

• Include OCIO portfolios in composites the portion of the portfolio that excludes legacy assets when the non-legacy portion of the portfolio is consistent with the mandate for an OCIO Portfolio. 

The guidelines can be viewed here: 

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Tags: CFA Institute, GIPS, Global Investment Performance Standards, OCIO