That usually meant they’re exclusively going to be able to handle Aussie equities, and that’s about it. And they may have a particular skill set in a particular segment of the Australian market, but it’s a very narrow definition. The transition managers that will survive are the ones that have the ability to have a breadth of asset class exposures, a breadth of market exposures. Jim Karelas: Global by nature. Drew Vaughan: And then the panel need comes in, because of the counterparty risk problem.

Because there will be times that you simply can’t deal with one transition manager because of counterparty exposure in the rest of the portfolio, and it will be prudent to have someone else on the panel. Troy Rieck: For us it’s an inner panel and an outer panel. There’s a group of people who understand our needs and have worked well for us in the past. We want strategic partnerships, with potential conflicts on the table – daylight is the best antiseptic. Then there’s a broad panel of people including some of our asset class specialists.

You’ve got to find people you can trust and you can put your hand on your heart and stand in front of your fiduciaries and say, yeah, these guys understand what you want and they’ve done a good job, and you can trust them. Jim Karelas: In a market that’s more volatile the most important, first thing is to run a definitive pre-trade, analysis, to give an indication of what the constraints are within the portfolio.

Fixed income’s been a classic example in the last three months whereby we’ve had to have a two-phased approach – the liquid portion and the longer proportion which actually requires a lot more work to it. So these are the discussions we have with the clients saying, you know, besides the fact there are volatile times, so your opportunity costs are actually going to blow out and it can potentially cost you a lot more, at the same time there are risks inherent within your portfolio due to liquidity constraints.

Fenella Gray: We’re finding stakeholders are a lot more interested in being updated on an intra-day basis during the transition process. Before it was probably once a week or at the end of the transition, but now there’s an interest. ‘How’s it going? What are the trends today? How are you tracking against benchmark?’ Jim Karelas: Particularly when you’re getting 3-5 per cent moves overnight on the global market. If you’ve been benchmarked at the prior night’s close, then if the market’s 5 per cent down overnight, then you’re already behind the eight-ball from a performance perspective.

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