Changing market conditions have accelerated interest in outsourced chief investment officer (OCIO) arrangements, Isio has said, with more large schemes now considering or implementing OCIO arrangements.

Once viewed primarily as a solution for only the most sophisticated schemes, Isio suggested that OCIO arrangements are now gaining broader appeal to pension schemes seeking tailored investment solutions.

Isio said that 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.

In particular, Isio said that it believes more large schemes, those with over £1bn in assets under management (AUM), are considering OCIO adoption to address operational pressures, growing regulatory demands, and rising portfolio complexity.

Isio head of fiduciary management oversight, Paula Champion, emphasised that OCIO adoption is one of the most “significant trends” in fiduciary management, stating that there has been a "clear shift" in how large schemes are approaching governance.

Champion pointed out that “trustees are 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,” she said.

Isio's research suggested that OCIO mandates are “reshaping” the UK fiduciary management landscape, pointing out that large-scale OCIO deals are driving a “significant” increase in AUM across the fiduciary management market.

Between 2023 and 2024, this contributed to a 21 per cent increase in AUM, prompting many trustees and sponsors to re-evaluate their schemes’ governance structures.

Although the overall growth of fiduciary mandates has remained relatively stable, partly due to schemes exiting the market following insurance transactions, Isio noted a "clear rise" in multi-billion-pound OCIO arrangements.

The firm pointed to this trend as a reflection of an increased desire among large schemes to reduce the governance burden while enhancing operational efficiency.

A key factor behind this shift, according to Isio, is the governance flexibility, offering integrated services tailored to a scheme’s needs and dedicated personnel for oversight.

The firm also argued that stricter regulation, volatile markets, and rising operational demands have only enhanced this interest in OCIOs, as schemes have been increasingly drawn to the economies of scale, access to wider investment expertise and stronger operational support that OCIOs offer.

Looking ahead, the consultancy said it anticipates an increase in OCIO mandates as more schemes assess the effectiveness of their current investment governance models, particularly amongst larger schemes with assets over £1bn.

Champion noted that the adoption of OCIO is expected to grow even more, as regulation becomes “more complex and internal resources continue to stretch”.

“The market is changing, and OCIO is becoming essential in assisting schemes to adapt, retain control, and achieve better results for their members,” she said.

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