As reported on PLANSPONSOR.com last month, JP Morgan has picked up Los Angeles-based Plexus Group, one of the industry’s leading consulting firms in the burgeoning field of transition management.
Nonetheless, the firms noted that they are engaged in an
“aggressive two-year plan” to enhance Plexus’s
benchmarking, data access and customized reporting
Plexus, headed by Wayne Wagner, has until now tended to be hired directly by plan sponsors – including the likes of the Texas Permanent Fund and Florida’s State Board of Administration – to monitor transitions.
Historically, when a fund manager was terminated, those holdings were sold and cash was given to a new manager to build up its portfolio – a strategy that experts say could cost a plan up to 5% of the value of the portfolio.
By contrast, manager transitions not only lower trading costs, they can eliminate the risk of market timing by keeping the plan invested and out of cash, and they can minimize the operational costs that are part and parcel of large portfolio shifts.
JP Morgan said the acquisition of Plexus signals a “domino effect” where concern among plan sponsors for trading efficiency — or “best execution” — has actually pushed investment managers and now even brokers to focus more than ever on execution efficiency.
Coincident with that announcement, JP Morgan also unveiled a new alliance with Inalytics, which will provide distribution and servicing support for Plexus products across Europe. Integration will take place immediately, according to the firms.
Inalytics, headquartered in London, is a privately held company that provides transaction cost analysis (TCA) and consulting services to pension funds and asset managers in the United Kingdom. The firm is headed by CEO Rick Di Mascio.
Plexus, which will become a subsidiary of JP Morgan Investor Services, has 180 clients managing some $1.5 trillion in 68 countries, according to the Financial Times.