UBS subsidiaries launch Outsourced CIO program

Two asset management subsidiaries of UBS have launched UBS Outsourced Chief Investment Officer [OCIO]. The new service, which targets institutional clients and members of investment committees at pension funds, religious organisations, foundations, charities and other institutions, aims to enable clients to retain portfolio oversight while delegating investment decisions to experienced managers. The news comes as a new white paper, published by the Greenwich Roundtable highlights that growing portfolio complexity is placing a greater onus on investment committees to adhere to good governance, and details how members can select a consultant or outsourced CIO to authorise for investment management. 

The growth of U.S. public pension fund assets, as well as rising portfolio complexity, requires investment committees of those funds to practice good governance by delegating the management of those funds, said a new white paper from the Greenwich Roundtable.

It is the latest in a series of white papers on best governance practices, with the latest titled “Best Governance Practices in Delegation and Consultant Selection for Long-Term Funds.”

The latest white paper is a how-to guide for investment committee members on delegating investment management authority both to chief investment officers and the “tsunami on the horizon,” outsourced CIOs, said Stephen McMenamin, executive director of the Greenwich Roundtable, in a telephone interview.

The investment committee, “ill-equipped to make investments” due to a lack of expertise, can hold an outsourced CIO accountable, Mr. McMenamin said.

The white paper answers the question, “How do we go about selecting a good consultant or a good outsourced chief investment officer?” McMenamin said.

Included among the principles of delegation and consultant selection are “articulating the organization's long-term objectives and its unique needs,” “evaluating realistically the organization's resources, both internal and external,” “setting the investment governance and operational framework,” and “deciding on the delegation of the investment operations,” either hiring an internal chief investment officer or evaluating outsourced chief investment officers, the paper said.

“About five years ago, we wrote a piece on portfolio construction,” Mr. McMenamin said. “From that came out something that really hit us over the head: that good governance can really add to the portfolio.”

Following that, the roundtable interviewed 150 investment committee chairmen of “all shapes and sizes,” and in March 2015, the roundtable's first white paper came out on “Best Governance Practices for Investment Committees.”