GLOBAL - Global Pensions has found transition managers are experiencing unprecedented volumes of business, due to pension funds switching asset classes and asset managers underperforming.
Simon Hutchinson, head of transition management - international, Northern Trust Global Investments, said: "From the beginning of this year we have seen a steady flow through the summer, which is unusual, and we expect that to continue."
Hutchinson explained one reason for increased business was that pension funds now used transition managers more widely.
"There is greater acceptance of transition managers, in that pension funds are hiring them more than they would do in the past, we have had quite a lot of repeat business," he said.
Graham Dixon, managing director and head of European transition services at Credit Suisse, said: "I have a suspicion that the recent performance in equity markets has caused some to reduce risk and their weighting to equities. There is greater demand in Europe for transition managers than before, particularly from Germany and Switzerland. There is also manager switching going on."
Dixon explained he had seen similar names on outgoing managers and similar names on incoming managers for performance reasons, and confirmed it was specialist managers rather than general managers that were being appointed.
Tom Clapham, director of transition management at Deutsche Bank in Hong Kong, said one reason the volume of transition events was growing so rapidly in Asia was because pension funds in the region had begun to switch into other asset classes and offshore investing.
Clapham said: "Traditionally pension funds in Asia have had a larger allocation to domestic bonds than their peers in other regions. This has been changing due to a number of factors, including demand from stakeholders for enhanced investment returns, more liberal regulations and a growing recognition of the benefits of diversification. It is this fundamental asset allocation shift which is driving the demand for transition management services across Asia."
Although there are no publicly available statistics on transition flows, Dixon claimed it had been "significantly busier" this June, July and August period, compared to the same period last year.
Clapham said Deutsche continued to experience continued growth for transition management services in Asia, the bank having recently completed the region's largest transition of the past 12 months in June this year.
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