Managing Partner Jim Scheinberg recently spoke with Institutional Investor about OCIO growth and how North Pier’s working group on data standards is addressing the transparency issue in the industry.
“A lot of money stampeded into the OCIO space and a lot of it was unassisted, direct searches,” Scheinberg said by phone. “Some of the searches that were run by a third party were not aided by meaningful quantitative data in the first place.”
Scheinberg has set up a working group with some OCIO providers, search consultants, and members of the legal community to start addressing the transparency issue in the industry. Scheinberg said the working group is trying to make data on the OCIO market transparent, open-source, and available en masse.
“If you’re talking about OCIO data, and eventually composites that would be formed from that data, things like who gets included into what bucket are crucial,” Scheinberg said. These things include asset allocation, risk budgets, and liquidity, among other factors, he said.
Then, there’s the issue of legacy assets. When an OCIO client switches to another provider, they may have illiquid investments that they will continue to hold. While this presents problems as is — the former OCIO may still charge fees on the investment, for instance — Scheinberg said that figuring this into the data is complicated.
“Does the new OCIO have responsibility on day one?” he said. “Do they carve those assets out?”
The group met in May and has since split into committees to delve deeper into the issue, he said, adding that the majority of participants believe that they would be able to accomplish the first set of standards within one to two years.