Yes, you raise a good point. A fair number of larger $1bb+ FOs and E&Fs stay with OCIOs. I think there are two primary conditions that need to hold in order for a standalone office to make sense: 1) the desire to pursue an individualized investment program; and 2) the ability to put together the talent, resources, access, and governance to successfully execute that individualized program.
I don't think there's a threshold that automatically pushes FOs and E&Fs to meet both conditions. Do I think a $3bb portfolio should stay with an OCIO? Probably not. But I appreciate that running an internal program is a significant undertaking and some stakeholders may not be ready for that.
I have also seen a few FOs and E&Fs keep using OCIOs only for a subset of their AUM and often the private component (I.e. the VC portfolio). Did you observe a similar trend?
That's a fairly common (though far from majority) arrangement across a range of institutional LPs and family offices. There's also a spectrum of service providers that compete to offer that asset class specialist expertise - consultants, OCIOs, FofFs, etc. Service agreements are generally custom negotiated and can be discretionary, non-discretionary, or somewhere in between.
I have seen a lot of $1bn+ family offices and endowments using OCIO services. At what point do you think this model starts to make less sense?
Yes, you raise a good point. A fair number of larger $1bb+ FOs and E&Fs stay with OCIOs. I think there are two primary conditions that need to hold in order for a standalone office to make sense: 1) the desire to pursue an individualized investment program; and 2) the ability to put together the talent, resources, access, and governance to successfully execute that individualized program.
I don't think there's a threshold that automatically pushes FOs and E&Fs to meet both conditions. Do I think a $3bb portfolio should stay with an OCIO? Probably not. But I appreciate that running an internal program is a significant undertaking and some stakeholders may not be ready for that.
I have also seen a few FOs and E&Fs keep using OCIOs only for a subset of their AUM and often the private component (I.e. the VC portfolio). Did you observe a similar trend?
That's a fairly common (though far from majority) arrangement across a range of institutional LPs and family offices. There's also a spectrum of service providers that compete to offer that asset class specialist expertise - consultants, OCIOs, FofFs, etc. Service agreements are generally custom negotiated and can be discretionary, non-discretionary, or somewhere in between.