UK - Transition managers have been too reluctant to release their track records to clients, said Graham Dixon, director at Inalytics.
Speaking at the Global Pensions Transition Management Forum in London, he said transition managers will argue it's impossible to compare two transition assignments, the track record will not reveal who the best manager is and the information is useless to clients.
"The data is enormously valuable. It's neither useless nor misleading and you should ask to see it," he told attendees.
He said pension funds and other clients should ask to see how many exercises the manager has done with similar values to their portfolio. Clients should also check the record to see how good the managers are at forecasting the cost of a transition ahead of time.
Dixon added: "Transition managers often tell me that clients have unreasonable expectations...Well, it's your own fault, guys. If you show them your track record and how these things bounce around, clients would have a realistic expectation about the risk of doing transitions."
In addition, allocating an investment advisor or someone similar to examine the results will not only expose errors but will encourage the transition manager to work more thoroughly.
In the transition management industry, the manager himself calculates the pre-trade benchmark used to compare his performance against, as well as the implementation shortfall benchmark of the transition, and then writes a report to show value of the results.
"The most beneficial transition arrangement is the current one in the industry. The problem is that it's most beneficial to the TM. It's not beneficial to the clients," said Dixon.
"I think this is a fairly strange set of affairs. We would not tolerate it in fund management," Dixon said.
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