Investment outsourcing is on the rise. Although it traditionally involved engaging an investment advisor to exercise discretion over an investment portfolio, it has, more recently, expanded to include institutional investors’ outsourcing of varying degrees of operational functions, including account-level monitoring and reporting, participant communication, custody, and middle-office and back-office services. The results of a recent survey of investment outsourcing firms published by Pension & Investments (P&I) highlighted that respondents’ outsourcing programs grew 25% from 2013 to an aggregate amount of $1.329 trillion worldwide in 2014. Those are big numbers.
P&I attributes much of investment outsourcing’s overall growth in the last six years to the challenges resulting from the 2008 market collapse as well as the popularity of liability-driven investments and the increasing complexity of investments. For more, check out P&I’s summary of the survey.