Mellon Transition Management Predicts Record Number of Asset Managers to Be Replaced in Second Half of 2009
June 17 2009 - 8:04AM
PR Newswire (US)
Trend to Indexing, Longer-Duration Bonds Accelerates SAN FRANCISCO
and LONDON, June 17 /PRNewswire-FirstCall/ -- Mellon Transition
Management (MTM), the transition management specialist for BNY
Mellon Asset Management, is predicting that a record number of
financial institutions such as pension funds and endowments will
replace their asset managers in the third and fourth quarters of
2009. The general trend over the last six months has been for
institutions to increase their exposure to indexing and
longer-duration bond strategies, according to Mark Keleher, chief
executive officer of MTM. He added that they are seeking to reduce
risk, which appears to include scaling back on firms actively
managing assets. Institutions utilize transition managers such as
MTM to minimize their costs and risks when changing managers. They
make these changes if they are unhappy with the performance of an
asset manager or if they are changing their asset allocation
strategies. Keleher said he expects the number of transitions
executed in the third and fourth quarters of 2009 to reach record
numbers. He based this prediction on the more than 40 percent
increase in the number of pre-trade inquiries during the first five
months of 2009 and the substantial jump in executed transitions in
the second quarter of 2009 versus the 2009 first quarter. Pretrade
inquiries have proven to be a good predictor of transition
activity, he said, often leading actual transition activity by
several months. Pre-trade inquiries are done by institutions to
gauge the costs and risks of switching managers. "While the
business has been increasing all year, institutions are
significantly accelerating the number of asset managers they are
replacing," Keleher said. Before the latest spike in interest,
Keleher said MTM had been growing the assets that it transitions at
a compounded rate of more than 40 percent annually over the last
three years. "Our growth accelerated as a result of the high
volatility in the financial markets between late 2007 and early
2009," said Keleher. "Market turbulence accelerated the rising
dominance of transition managers such as MTM that follow the
fiduciary model." The fiduciary model is the more transparent way
of conducting transitions, as the transition manager's clients are
made aware of how the transition manager is compensated, Keleher
said. "The fiduciary model helps protect clients from the often
opaque pricing and conflicts of interest inherent to the
'broker-dealer' model of transition management. Market share gains
by transition managers following the fiduciary model led to the
exit of a number of broker-dealer transition managers over the last
18 months." Earlier this year, MTM expanded its London team by
seven specialists, which increased the global organization
representing the business to 50 professionals. In May, it was named
Transition Management Provider of the Year at the International
Custody & Fund Administration (ICFA) Global Awards 2009 and
Best Transition Manager in the Scheme Services categories at the FT
Pension Investment Provider Awards 2009. Mellon Transition
Management also was named "2009 Transition Manager of the Year" for
the second successive year at the 2009 Global Pensions Awards. Plan
Sponsor has awarded MTM more "Best in Class" Awards than any other
provider in 2008. Notes to Editors The Bank of New York Mellon
Corporation is a global financial services company focused on
helping clients manage and service their financial assets,
operating in 34 countries and serving more than 100 markets. The
company is a leading provider of financial services for
institutions, corporations and high-net-worth individuals,
providing superior asset management and wealth management, asset
servicing, issuer services, clearing services and treasury services
through a worldwide client-focused team. It has $19.5 trillion in
assets under custody and administration, $881 billion in assets
under management, services more than $11 trillion in outstanding
debt and processes global payments averaging $1.8 trillion per day.
Additional information is available at http://www.bnymellon.com/.
Mellon Transition Management is a division of The Bank of New York
Mellon. Outside of the U.S. MTM is represented in the U.K. by BNY
Mellon Asset Management International Limited and in Australia
through BNY Mellon Asset Management Australia Limited. This press
release is issued by The Bank of New York Mellon to members of the
financial press and media. All information and figures source The
Bank of New York Mellon as at 31 March 2009 unless otherwise
stated. This press release is for information purposes only. It
does not constitute an offer or solicitation of securities or
investment services or an endorsement thereof in any jurisdiction
or in any circumstance in which such offer or solicitation is
unlawful or not authorised. The Bank of New York Mellon, London
Branch, registered in England and Wales with FC005522 and BR000818.
Branch office: One Canada Square, London E14 5AL Authorised and
regulated in the UK by the Financial Services Authority. A Bank of
New York Mellon Company(SM) DATASOURCE: The Bank of New York Mellon
Corporation CONTACT: Mike Dunn, +1-212-922-7859, , or Sara
Deutscher, +44-20-7163-2744, Web Site: http://www.bnymellon.com/
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