The number of single-family offices hiring outside chief investment
officers has doubled since 2005, with half now outsourcing the work,
says a survey by the Institute for Private Investors.
In 2005 only one quarter outsourced the investment function.
IPI surveyed its 1,100 private investor members who have investible assets of $30 million or more. Of those surveyed, 60% have $200 million or more in investible assets and one fifth have $1billion or more.
Looking at the CIO outsourcing trend another way, 75% of the single-family offices overseeing $30 million to $500 million outsource the investment function.
Mandates given to the CIO firms include recommending managers or funds, making tactical or strategic asset allocation recommendations and managing selection and monitoring.
In some circumstances, the CIO firm places assets in co-mingled funds or limited partnerships for economics of scale, which is advantageous to both the family office and the CIO firm, according to IPI, which noted that investment firms, consultants, wealth boutiques, multifamily offices and banks stand to gain assets through this outsourcing.
"The firms which can most concretely show their value-add as shrewd allocators and astute fund pickers will likely prove to be the winners in this race for new business," says Charlotte Beyer, IPI founder and CEO.