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2016 Transition Management Survey

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1. How many total portfolio transitions (including legacy and target) did your organization conduct?

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
One 25% 23% 10% 14%
Two 17% 25% -33% -28%
Three 13% 10% 26% 8%
Four 11% 7% 57% 1%
Five 6% 7% -13% 22%
More than five 28% 27% 4% 5%
Average 4.83 5.96 -19% 5%

2. Was the number of portfolio transitions higher or lower this year than the previous year?

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
More transitions this year 53% 68% -23% 11%
Fewer transitions this year 19% 26% -26% -37%
Same number of transitions 28% 6% 343% 26%

3. What was the reason for conducting your transition(s)?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
Manager performance 55% 41%
36% 12%
Change in manager personnel/structure 27% 26%
6% 16%
Asset allocation shift 35% 49%
-28% -41%
Rebalance 22% 28%
-21% -20%
Restructure of your fund 29% 32%
-8% -24%
Change in fund/manager benchmark 10% 12%
-11% -31%
Cash flow, in or out 11% 20%
-43% 19%
Other 5% 6%
-15% -37%

4. What types of securities were transitioned?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
US equities 84% 79%
6% 9%
Non-US equities 62% 70%
-12% -10%
Fixed income 25% 35%
-29% -1%
Foreign exchange 18% 20%
-9% -6%
Other 1% 1%
0% -85%

5. Did you use a consultant to assist/advise you in the transition(s)?

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
Yes 43% 34% 27% 38%
No 57% 66% -14% -12%

6. How many transition managers are usually considered for each transition?

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
One 24% 24% 0% 1%
Two 31% 42% -25% 4%
Three 36% 28% 26% -5%
Four 6% 6% 0% 28%
More than four 3% 0% n/a -23%

7. Do you require a transition management agreement to govern the transition(s)?

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
Always 81% 90% -10% -6%
Sometimes 14% 6% 125% 86%
Rarely 3% 1% 185% -29%
Never 1% 2% -53% -29%

8. What kinds of transition trades did you conduct?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
Agency 77% 59%
31% 46%
Principal 12% 21%
-45% -48%
Hybrid 14% 28%
-52% -58%

9. When you decide to use a transition manager, how do you usually go about selecting a provider?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
We have one firm we always use 23% 24%
-5% -7%
Pre-approved list of providers 65% 57%
15% 18%
Recommendation of our consultant 16% 12%
-28% -2%
RFP/proposals from providers willing to bid 16% 17%
-8% -10%

10. What is your typical compensation arrangement with the transition manager?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
Commission on agency trades 68% 67%
1% -11%
Flat fee 16% 13%
17% 51%
Principal trade 3% 3%
0% -62%
Percentage of assets 6% 8%
-31% -46%
No explicit fee 3% 8%
-59% -62%
Uncertain 9% 8%
18% 101%
Other 1% 3%
-68% -62%

11. Which benchmark(s) do you prefer to use to gauge transition costs?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
Volume-weighted average price (VWAP) 28% 25%
9% -1%
Explicit costs 31% 34%
-8% -34%
Implementation shortfall (T Standard) 71% 68%
5% 8%
Prior night’s close 12% 13%
-9% -23%
Other 4% 3%
26% 236%

12. Do you care if your transition manager derives undisclosed benefits through any of the following means?

 

2016

2015

   1-YR
CHANGE		 5-YR
CHANGE
Sales trading/indications of interest 74% 77%
-3% -3%
Affiliated execution venues/trading desks 84% 84%
0% 3%
Net trading 87% 79%
10% 6%
Internal crossing 66% 65%
1% 3%
Selling your order flow 86% 83%
3% 4%
Affiliated principal trading 83% 81%
3% 5%
Rebates from execution venues 81% 79%
3% 0%
Undisclosed riskless principal transactions 80% 77%
3% 0%
Revenue sharing agreements w/unaffiliated brokers/execution venues 85% 88%
-2% 2%

13. How well do you understand the different transition management models (i.e. sell side/buy side/agency/principal)?

100%
80%
60%
40%
20%
0%

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
5-Full understanding 18% 23% -23% 36%
4-Good understanding 45% 43% 5% 58%
3-Basic understanding 31% 30% 3% -18%
2-Very little understanding 5% 3% 66% -63%
1-No understanding 2% 2% 0% -79%
Average 3.73 3.84 -3% 14%

14. Do you trust the transition management industry as a whole?

100%
80%
60%
40%
20%
0%

2016

2015

    2016 2015 1-YR
CHANGE		 5-YR
CHANGE
5-Trust completely 3% 6% -42% 371%
4-Mostly trust 56% 53% 7% 139%
3-Neutral 33% 35% -5% -34%
2-Little trust 5% 6% -14% -76%
1-No trust 3% 1% 200% -56%
Average 3.53% 3.56% -1% 21%
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