Key Takeaways
- • Morgan Stanley has selected Sona Menon, previously OCIO head and head of pensions for North America at Cambridge Associates, to lead its $184 billion outsourced chief investment officer (OCIO) business, effective April, according to an internal memo obtained by Institutional Investor.
- • Menon succeeds Alper Daglioglu, who left in January to join Brookfield Asset Management.
- • Menon will report to Lisa Shalett, CIO of Morgan Stanley's wealth management division and head of the global investment office, and to Jeremy France, head of institutional consulting services.
- • Morgan Stanley ranks as the sixth largest OCIO provider by assets under management as of June, and has won major mandates including Hartford HealthCare's $4.3 billion portfolio and Vanderbilt University Medical Center's $1.1 billion portfolio in 2022.
- • Industry forecasts project U.S. OCIO-managed assets reaching $4.2 trillion by 2028 and global assets reaching $7.3 trillion by 2029, per Chestnut Advisory, fueling competition for talent and consolidation.
Summary
Morgan Stanley has named Sona Menon head of its outsourced chief investment officer (OCIO) business, a unit managing $184 billion, according to an internal company memo received by Institutional Investor. Menon joins from Cambridge Associates, where she served as the firm's OCIO leader and head of pensions for North America. She will take the role in April, replacing Alper Daglioglu, who departed in January to join Brookfield Asset Management.
Menon will report to Lisa Shalett, chief investment officer for the firm's wealth management division and head of the global investment office, and to Jeremy France, head of institutional consulting services. The appointment comes as competition among OCIO providers intensifies for experienced talent, even as Morgan Stanley works to build the business while cutting a significant portion of its workforce.
Morgan Stanley has expanded its OCIO franchise through large institutional mandates. In 2022 it assumed management of Hartford HealthCare's $4.3 billion portfolio, an unconventional move for healthcare providers at the time that prompted internal turmoil and resignations at HHC. The same year, it took control of Vanderbilt University Medical Center's $1.1 billion portfolio. As of June, Morgan Stanley ranked as the sixth largest OCIO provider by assets managed.
The OCIO sector is growing rapidly as nonprofits and healthcare organizations increasingly outsource investment management. Chestnut Advisory projects OCIO-managed assets will reach $4.2 trillion in the U.S. by 2028 and, based on an updated forecast incorporating new reporting criteria, $7.3 trillion globally by 2029. Endowments and foundations have been a major driver of this growth, with Cerulli Associates projecting an 11.3 percent annual increase in outsourced E&F assets over the next five years.
Large OCIO providers are also pursuing growth through consolidation. Recent examples cited include Mercer's acquisition of Vanguard's OCIO business and investment boutique SECOR, Hightower's investment in NEPC, and the merger of Cerity Partners and Agility.
Menon will report to Lisa Shalett, chief investment officer for the firm's wealth management division and head of the global investment office, and to Jeremy France, head of institutional consulting services. The appointment comes as competition among OCIO providers intensifies for experienced talent, even as Morgan Stanley works to build the business while cutting a significant portion of its workforce.
Morgan Stanley has expanded its OCIO franchise through large institutional mandates. In 2022 it assumed management of Hartford HealthCare's $4.3 billion portfolio, an unconventional move for healthcare providers at the time that prompted internal turmoil and resignations at HHC. The same year, it took control of Vanderbilt University Medical Center's $1.1 billion portfolio. As of June, Morgan Stanley ranked as the sixth largest OCIO provider by assets managed.
The OCIO sector is growing rapidly as nonprofits and healthcare organizations increasingly outsource investment management. Chestnut Advisory projects OCIO-managed assets will reach $4.2 trillion in the U.S. by 2028 and, based on an updated forecast incorporating new reporting criteria, $7.3 trillion globally by 2029. Endowments and foundations have been a major driver of this growth, with Cerulli Associates projecting an 11.3 percent annual increase in outsourced E&F assets over the next five years.
Large OCIO providers are also pursuing growth through consolidation. Recent examples cited include Mercer's acquisition of Vanguard's OCIO business and investment boutique SECOR, Hightower's investment in NEPC, and the merger of Cerity Partners and Agility.
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