“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.”
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).