A record number of institutional investors appear poised to shuffle their money manager lineups during the second half of 2009, according to Mark Keleher, the London-based CEO of Mellon Transition Management.
In a telephone interview today, Mr. Keleher said a “huge” pickup this year in “pre-trade inquiries” — a leading indicator of transition activity — augurs a tremendous amount of turnover during the final six months of the year.
Both the number of transitions and the volume of assets involved should set records, Mr. Keleher said. Mellon couldn't immediately provide figures for previous transition industry highs.
“Every single client” is likely to change at least one manager, after having had the chance to digest the fast-paced developments that roiled capital markets starting late last year, he said. Trends seen so far in 2009 — toward indexing and long-duration bonds and away from managers with opaque, “black-box” strategies — should continue to accelerate, Mr. Keleher predicted.
Despite a falloff in industrywide transition activity last year as market volatility pushed plan sponsors to the sidelines, Mellon Transition Management enjoyed a record year in 2008, primarily because of liquidations of portfolios in the months following Lehman Brothers' Sept. 15 bankruptcy, but also reflecting the woes of competitors affiliated with whipsawed broker-dealers.