Key takeaways
- We believe OCIO providers are uniquely equipped to capture opportunities across the full spectrum of private markets.
- OCIOs offer scale, cost efficiencies and access to leading managers across the private markets landscape.
- Top OCIOs deliver end-to-end private-market management, from sourcing managers and deploying capital to monitoring investments and overseeing full portfolios.
After the turbulence in public markets earlier this year, demand for private-market strategies has only grown. It’s not hard to see why, as private assets tend to be less volatile and often serve as effective portfolio diversifiers. In addition, investing in this asset class means gaining exposure to a much wider set of companies—not to mention the potential for higher long-term returns.
But getting the most out of private markets requires selecting the right partner. Institutional investors generally have two options to choose from: working with a boutique firm focused exclusively on private markets or working with an outsourced chief investment officer (OCIO).
We believe an OCIO partnership is the stronger choice. With broad access to top-tier managers, scale advantages, deep operational infrastructure and critical resources to oversee risk and capital deployment, OCIOs can often take advantages of opportunities that single-strategy boutiques often cannot. Here are five reasons why we believe partnering with an OCIO is the optimal way to unlock the potential of private markets.
1. Expertise across every opportunity
Private markets open the door to a much wider array of investment opportunities, and the best OCIOs are equipped to navigate them all. They tap into everything from private equity, private credit, real estate and infrastructure to primary and secondary funds and co-investments. This provides diversification across sectors, regions and strategies, reducing concentration risk and smoothing returns over time. By contrast, smaller boutiques may not have sufficient resources to cover the full breadth of the private market landscape, resulting in the potential for opportunities to be left on the table.
We also believe a best-in-class OCIO will use an open-architecture approach to access the best private-market strategies, selecting top managers from both large and boutique firms rather than being tied to a single product. This flexibility captures niche opportunities, avoids overlapping investments and builds a truly diversified portfolio. For instance, while a boutique may specialize in venture capital, an OCIO can complement that with private credit, real estate or other strategies—creating multiple sources of return and enhancing risk management.
2. Scale and cost advantages
Because OCIOs manage investments for multiple institutions, they naturally have scale advantages that smaller, boutique firms lack. For example, the right OCIO can negotiate lower fees with alternatives managers and secure better terms from legal, accounting and due diligence providers.
Operational efficiency is another advantage. By spreading monitoring, reporting and compliance across multiple clients, OCIOs reduce the overall cost of managing private market allocations. This efficiency can make strategies that are otherwise expensive or hard to access more attainable for investors.
3. Access to top-tier managers
A major advantage of an OCIO is access to private markets managers that smaller institutions often cannot reach on their own. The best OCIOs can select compelling opportunities across private equity, private credit, real estate and infrastructure.
But it’s not just about picking managers. Top OCIOs also think about the portfolio as a whole, spreading investments across vintages, sectors, regions and strategies. They actively monitor, rebalance and adjust allocations to capture returns while keeping risk and liquidity in check. Simply put, we believe the best OCIOs combine the right managers with smart portfolio strategy to boost performance and reduce risk.
4. Seamless execution
We believe top OCIOs provide end-to-end private-market management—sourcing managers, putting capital to work, monitoring investments and overseeing holistic portfolio management across traditional and alternative investment allocations. Their robust infrastructure and proven processes support every step, enabling strong coordination across multiple managers and complex strategies. Boutiques, by contrast, often don’t have the same resources, making it harder to source, underwrite and monitor multiple managers, manage commitment pacing and liquidity, or execute complex strategies.
Building on this capacity, we believe the best OCIOs also handle portfolio overlays, transitions and systematic rebalancing in-house. This ensures capital is deployed efficiently and that strategic/tactical opportunities can be acted on quickly. The end result for institutional investors? Faster execution without the cost and hassle of building internal systems.
5. Liquidity management
Private markets involve complex timing, including capital calls and distributions, which boutiques may struggle to manage fully in-house. Top OCIO providers, by contrast, coordinate liquidity planning across all private-market exposures, ensuring capital is available when needed and investments are timed efficiently.
By forecasting cash needs, aligning distributions with funding requirements and maintaining operational buffers, an OCIO keeps institutions fully invested without sacrificing flexibility. This approach reduces the risk of cash shortfalls, smooths portfolio cash flows and supports key spending or strategic initiatives. Investors can plan with confidence, knowing liquidity is actively managed across the entire portfolio.
1 Source: Milliman’s Pension Funding Index
The bottom line
In today’s complex investment landscape, we believe private markets are essential for diversified, long-term growth—but navigating them effectively requires more than access. The right OCIO brings expertise in selecting top managers, leveraging scale, constructing structured portfolios, executing seamlessly and managing liquidity thoughtfully.
For institutional investors focused on private markets, choosing the right OCIO can make complex allocations simpler, faster and more effective—all while supporting long-term portfolio success.
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Important information pertaining to the hypothetical example: Past performance does not predict future returns. Return level is proportionately scaled in line with cash level to be overlaid. Source: Russell Investments. Assumptions: Average cash level 1.0%, 10-year history from 12/31/2023, gross of fees. Opportunity cost from not securitizing cash varies by asset allocation and time period, and is represented by horizontal bars as marked within the chart legend. Target asset allocation used: 0% cash, 74% MSCI World, 26% Global Aggregate (GBP Hedged). For illustrative purposes only. Does not represent any actual investment. Indexes are unmanaged and cannot be invested in directly. Performance benefit (net) of overlaying cash by last 5 individual calendar year is as follows: 2023:20 bps, 2022:-17bps, 2021:16bps, 2020:14bps, 2019:23bps.
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