- Summary & Methodology
- Industry Trends
- Transition Manager League Tables
- Global
- USA
- Canada
- Europe/ UK/ MENA
- Asia/ Pacific
- Transition Manager Profiles
- Abel Noser
- BlackRock
- BTIG
- Citi
- Macquarie
- Northern Trust
- Pavilion
- Penserra
- Russell
- State Street
Past Surveys
Trends Show Shifts in How TM is Utilized.
Our 2018 annual Transition Management (TM) survey showed quite a few trends which might be the result of increased transparency in the industry. Overall, TM continues to remain strong, and with the scandals of several years ago now a distant memory, the majority of asset owner respondents indicate trust in the industry as a whole.
Interestingly, our survey also discovered that the reasons for transitions are shifting: whereas last year, the top reasons were manager performance and fund restructuring, most respondents this year used transition management services for asset allocations or to change manager personnel. Our survey also showed there have been fewer principal trades and more hybrid trades, whereas last year, principal trades surged — possibly because the need for transparency has taken center stage.
Transition managers come strongly into play when asset owners need to reallocate, restructure assets, terminate managers, or raise cash flow. Yet, following the scandals, asset owners and consultants have been demanding more transparency. As a result, most are seeing the full cost of transactions and are better able to evaluate whether the transaction is truly worth the money. The industry has gotten a bit tighter in recent years, and many transition managers have exited the industry. “The ones that have stayed have evolved and perfected what they do in order to stay in the business,” Notes Rosa Limas, a director at Segal Marco Advisors. “Much by way of re-clarifying their fiduciary role, executing trades on an agency-only basis, and added reporting transparency,” she said.
Transparency may also be a possible reason for principal trades declining because these principal dealings can generate additional profits for a transition manager, which may conflict with having the client’s best interest. “Any potential conflict of interest is a huge ‘no,’” said Limas. “Also, principal trade profits are harder to detect as they can be in the form of bid/ask spreads.” As a result, according to best investment practices, things that are harder to detect may call for more due diligence questions in the near future.
Some asset owners and OCIOs are using TM panels to compare trade costs and cut down on solicitation time. TM panels create a preferred group of TMs that has already been vetted and approved by an asset owner’s board. Limas is seeing it used as a best practice for sourcing and comparing costs, trading strategies, and to allow for expedited implementations. “In the event a client has a transition, having two to three approved transition managers within your panel to source pre-trade cost analyses and the ability to select the best transition manager for that particular event is prudent,” she said.
This year’s survey shows where the movement is, who the top managers are, and what their clients think of them. It also shows trends in how much money TMs are used for. Not surprising, the total number of portfolio transitions continues to increase. —CIO
METHODOLOGY
Via an online questionnaire open from July 18 through September 10, CIO asked clients of transition management services to rate the managers they used in the previous 12 months. By the survey’s close, 204 responses were collected, representing 243 ratings for 14 managers. In order to be included on any league table, managers needed at least 10 total responses; 10 firms reached this minimum. In addition, a manager garnering at least five responses in each of any two regions was eligible for a global rating. Providers qualifying in just one region are considered regional. Seven managers qualified for global ratings, and three are regional—all three qualifying in the US only. Two providers—Russell and State Street—qualified in three regions. All scores are unweighted averages.