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2017 Transition Management Survey

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Art by Jillian Tamaki

Industry Trends


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




2017





2016






  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
One 25% 20% -22% -10%
Two 17% 22% 29% -7%
Three 13% 10% -18% -11%
Four 11% 10% -6% -5%
Five 6% 5% -22% -5%
More than five 28% 33% 16% 22%
Average 4.8 6.4 33% 40%




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




2017





2016






  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
More transitions this year 53% 57% 8% 19%
Fewer transitions this year 19% 19% 2% -35%
Same number of transitions 28% 24% -16% 7%




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

2016 2017 1-Yr Change 6-Yr Change
Manager Performance 55 54 -2 9
Change in manager personnel/

structure		 27 30 10 28
Asset allocation shift 35 38 8 -37
Rebalance 22 28 30 4
Restructure of your fund 29 42 43 9
Change in fund/manager benchmark 10 5 -48 -64
Cash flow, in or out 11 21 84 120
Other 5 15 182 79





4. What types of securities were transitioned?

2016 2017 1-Yr Change 6-Yr Change
US equities 84 84 0 9
Non-US equities 62 66 7 -4
Fixed income 25 35 41 40
Foreign exchange 18 23 29 37
Other 1 3 135 -64





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




2017





2016






  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
Yes 43% 42% -2% 35%
No 57% 58% 1% -11%





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




2017





2016






  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
One 24% 30% 24% 26%
Two 31% 32% 3% 8%
Three 36% 29% -17% -21%
Four 6% 6% 10% 41%
More than four 3% 2% -39% -53%





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

  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
Always 81% 90% 12% 6%
Sometimes 14% 6% -42% 8%
Rarely 3% 1% -84% -89%
Never 1% 2% -100% -100%





8. What kinds of transition trades did you conduct?

2016 2017 1-Yr Change 6-Yr Change
Agency 77 65 -16 23
Principal 12 23 96 1
Hybrid 14 19 38 -42





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

2016 2017 1-Yr Change 6-Yr Change
We have one firm we always use 23 23 2 -5
Pre-approved list of providers 65 63 -4 13
Recommendation of our consultant 16 13 -17 -18
RFP/proposals from providers willing to bid 16 13 -17 -25





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

2016 2017 1-Yr Change 6-Yr Change
Commission on agency trades 68 75 10 -2
Flat fee 16 14 -10 36
Principal trade 3 5 61 -39
Percentage of assets 6 9 55 -16
No explicit fee 3 4 13 -57
Uncertain 9 3 -70 -39
Other 1 3 142 -9





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

2016 2017 1-Yr Change 6-Yr Change
Volume-weighted average price (VWAP) 28 22 -20 -21
Explicit costs 31 35 14 -25
Implementation shortfall (T Standard) 71 80 12 22
Prior night’s close 12 14 21 -7
Other 4 4 -14 190





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

2016 2017 1-Yr Change 6-Yr Change
Sales trading/indications of interest 74 82 10 6
Affiliated execution venues/trading desks 84 89 5 8
Net trading 87 92 6 12
Internal crossing 66 76 16 19
Selling your order flow 86 83 -4 0
Affiliated principal trading 83 86 3 8
Rebates from execution venues 81 86 6 5
Undisclosed riskless principal transactions 80 83 4 3
Revenue sharing agreements w/

unaffiliated brokers/execution venues		 85 89 4 7





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

  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
5-Full understanding 18% 21% 16% 58%
4-Good understanding 45% 44% -2% 55%
3-Basic understanding 31% 30% -3% -21%
2-Very little understanding 5% 5% -2% -64%
1-No understanding 2% 1% -47% -89%
Average 3.73 3.79 2% 16%





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

  2016 2017 1-YR
CHANGE		 5-YR
CHANGE
5-Trust completely 3% 8% 140% 1030%
4-Mostly trust 56% 67% 19% 185%
3-Neutral 33% 21% -37% -58%
2-Little trust 5% 4% -20% -81%
1-No trust 3% 0% -100% -100%
Average 3.53 3.79 7% 30%
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