Late 2009 Seen as Brisk for Transition Management

June 17, 2009 ( - A record number of pension funds, endowments and other financial institutions will swap out their asset managers in the last half of 2009, so the transition management market should be brisk.

Mellon Transition Management (MTM), the transition management arm for BNY Mellon Asset Management, said in a news release the general trend over the last six months has been for institutions to increase their exposure to indexing and longer-duration bond strategies to reduce risk, which appears to include scaling back on firms actively managing assets.

Mark Keleher, chief executive officer of MTM, 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% 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, according to the announcement.

Pre-trade 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.

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% annually over the last three years.