In Practice May 31, 2011
Transitioning Assets A Slow Process, Consultant Says
Institutional investors are taking more time to change investment
managers or asset allocations than they did before the 2008 financial
crisis, according to Mellon Transition Management (MTM).
Reported by Rebecca Moore
“Since the financial crisis began in 2008, we have seen
institutions take as long as a full year to complete the transitioning
of their assets away from one investment manager to another after
beginning their initial consultations with us,” said Mark Keleher,
co-founder of MTM and its chief executive officer. “This compares with a typical period of approximately two to four weeks
before the crisis began.”
MTM attributes the longer time periods to heightened compliance scrutiny across the institutional investment landscape as plan sponsors and investment managers deal with regulatory changes and governance challenges. Transition management trends that began after the financial crisis are continuing today, as institutions continue to move money away from home country equities to both longer term corporate bonds and international equities.
“Transition management has evolved significantly since we opened our doors 10 years ago,” Keleher said. “While this service originated as a low-cost way to change asset allocations or investment managers, the focus is now much more on risk control. Increasingly, transition assignments involve multiple asset classes, illiquid securities, global markets and derivative overlays.”
MTM attributes the longer time periods to heightened compliance scrutiny across the institutional investment landscape as plan sponsors and investment managers deal with regulatory changes and governance challenges. Transition management trends that began after the financial crisis are continuing today, as institutions continue to move money away from home country equities to both longer term corporate bonds and international equities.
“Transition management has evolved significantly since we opened our doors 10 years ago,” Keleher said. “While this service originated as a low-cost way to change asset allocations or investment managers, the focus is now much more on risk control. Increasingly, transition assignments involve multiple asset classes, illiquid securities, global markets and derivative overlays.”