Transition Management Performance – Meeting or missing expectation

Following on from MJ Hudson’s transition manager survey, in 2017, the firm has teamed up with market-leading Netherlands-based fiduciary manager, Blue Sky Group, to conduct a second exercise, reviewing the track record of transition managers. This work is significant as, until now, little has been published on transition track records.

Understandably, transition managers are protective of their performance data, so whilst most agreed to share, some did not. The resulting track record data universe captures around 2,200 individual transition events, executed between 2014 and 2019, worth nearly $900 billion, collectively, including both equity and fixed income transitions, but broadly excluding transition funded from or delivering cash.

The data captured includes the following:

  • Pre-estimate of transition implementation shortfall
  • Pre-estimate range of potential outcomes, i.e., both one and two standard deviation estimates of risk
  • The actual, realised implementation shortfall result

This data was segmented by:

  • Client type
  • Client location (region)
  • Size of event (legacy asset value)
  • Legacy and target asset classes