Market volatility driven by external uncertainty, along with a shift of funds into equities, is fueling rapid growth in standardized OCIO (outsourced chief investment officer) products designed for individual investors and small and midsize companies. The products are also seen as helping improve the profit structure of OCIO businesses, long criticized for low profitability.
As of April 21, the financial investment industry said NH Investment & Securities’ standardized OCIO product, the “NH Columbus EMP Wrap,” had 370 billion won in assets under management at the end of the first quarter. That was up 100 billion won from 270 billion won at the end of last year. With the product at about 100 billion won at the end of 2024, the pace of inflows has accelerated, the industry said. The increase was attributed to rising demand from small and midsize corporate clients seeking to track stock-market returns during an upswing, and from individual investors looking for volatility management.
Returns have also stood out. The product has gained 5.3% since the start of the year. Since its 2019 launch, it has posted an average annual return of about 10% over seven years. The average return over the past three years was 15%, and the past one-year return was 21.15%, helped by base effects after volatility widened last year amid tariff-related issues.
OCIO services typically provide customized asset-allocation management for large institutions such as pension funds. The NH Columbus EMP Wrap standardizes that approach into a model portfolio so it can be used by small and midsize companies and individual investors. Demand has grown as an alternative for companies that fall short of the minimum subscription for customized OCIO, about 50 billion won. Individuals can subscribe with at least 30 million won.
The standardized format is seen as attractive because it lowers entry barriers and allows flexible inflows and outflows. With no fixed contract term, liquidity management is easier. Investors can also use the same model portfolios applied to large institutional clients without building a separate asset-allocation strategy.
Unlike mutual fund-style OCIO products offered by asset managers, the wrap structure is managed by account, allowing responses tailored to each client’s tax and accounting schedules. Industry participants described it as combining the pooled-management advantages of funds with the customized oversight of discretionary accounts.
Standardized products still account for only about 10% of NH Investment & Securities’ total OCIO assets under management excluding large funds, which stand at 3.7 trillion won. But they have contributed more on profitability, the industry said. With standardized OCIO assets rising about 100 billion won so far this year, the firm’s overall OCIO fee rate increased to about 17 basis points from 11 basis points at the end of last year, partially offsetting the low-fee structure of traditional OCIO operations.
NH Investment & Securities expanded its standardized OCIO lineup in February by launching “NH Columbus Income.” The product allocates assets mainly to bonds and alternative investments, excluding the equity portion, targeting corporate investors wary of volatility.
An industry official said more companies that previously relied on deposits or short-term financial products are moving into risk assets to boost returns, and demand to keep pace is flowing into customized OCIO offerings.
* This article has been translated by AI.
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