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The results of the CIO Sentiment Survey broken down into investment impact and themes

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External Managers

When it comes to sourcing new managers, most CIOs surveyed use existing relationships with providers and consultants to introduce new relationships. Introduction requests via consultants, or making direct enquiries to a new manager themselves, are the least-used route. Elsewhere, survey responses revealed asset owners primarily seek broad portfolio advice from their external managers. In a second and third seam they want managers to provide thought leadership and expert capital market assumptions and investment focused services. As for the mode of delivery, dedicated relationship managers are key.

“CIOs are increasingly relying on existing strategic partnerships for new mandates, as they look to consolidate overall relationships and leverage ties with asset managers they already know. They are taking greater control in determining who they will do business with, and it’s putting pressure on managers, who are finding it harder to develop new relationships,” says Diane Cullen, a senior consultant at Casey Quirk based in Boston.

The data also revealed more CIOs in 2022 are working with a smaller manager roster

What additional services do you want from your asset managers?

1=highest rank, 5=lowest rank

2.2
Broad portfolio advice/expertise
2.4
Non-product content
2.5
Investment focused services
3.5
Digital tools 
4.6
Non-investment services

How do you want these services delivered?

1=highest rank, 4=lowest rank

1.6
Dedicated relationship mgmt
2.6
Online portal/Interface
2.6
Training / education
3.0
Events/conferences

The data also revealed more CIOs in 2022 are working with a smaller manager roster. Just under two thirds of respondents said they currently work with less than 50 managers, in contrast to last year when just over half of respondents said they worked with less than 50 managers.

But asset owners using a smaller manager cohort, doesn’t mean 2022 heralds a further reduction in the number of managers. Over two thirds of survey respondents noted plans to either moderately increase” (31 per cent) or “maintain” (33.3 per cent) their manager numbers. A fraction (2.4 per cent) said they planned to “significantly increase” their number of managers. Only seven per cent of respondents said they would “significantly decrease” their manager numbers. These figures contrasts to 2021 when most respondents said they expected their manager numbers to increase in a trend linked to the spike in active equity allocations.

How will the number of managers you work with going forward?

% of respondents

2.4%
31%
33.3%
26.2%
7.1%

% of respondents

key:

Significant increase
Moderately increase
Remain the same
Moderately decrease
Significantly decrease

In a legacy from the pandemic external meetings, investment processes and governance has shifted longer-term to a hybrid model of virtual and in-person contact

Elsewhere, 2022 data revealed asset owners forecasting a slight increase in their use of consultants to support investment decision making. That compares to a drop in consultant usage between 2020 and 2021 with many large asset owners reporting they didn’t use consultants at all or only to help them research managers.

In a legacy from the pandemic, and in line with 2021 respondent expectations, external meetings, investment processes and governance has shifted longer-term to a hybrid model of virtual and inperson contact. CIOs now primarily engage with their third-party managers and consultants via hybrid and virtual means. They only favour in-person meetings when they are developing new relationships, or during RFPs and pitching, after which relationships are subsequently maintained with virtual touchpoints. Still, regional nuances reveal US investors have more appetite for in-person meetings compared to investors in APAC where 41 per cent of respondents said they had virtual meetings.

Expected shift in working model

By % of respondent and function, 2021

Pitch/RFP meetings (new relationships)

Investment/manager (new relationship) diligence

Pitch/RFP meetings (existing relationships)

Irregular touchpoints with external partners/providers

General marketing

Regular periodic touchpoints with external partners/providers

Investment/manager relationship maintenance

26%
56%
19%

Pitch/RFP meetings (new relationships)

26%
63%
11%

Investment/manager (new relationship) diligence

15%
52%
33%

Pitch/RFP meetings (existing relationships)

11%
59%
30%

Irregular touchpoints with external partners/providers

7%
56%
37%

General marketing

7%
67%
26%

Regular periodic touchpoints with external partners/providers

7%
70%
22%

Investment/manager relationship maintenance

key:

In person
Hybrid
vertual