One way or another asset managers are in for a bumpy ride this year as many are likely to be replaced.
At least that’s the scenario according to Mellon Transition Management, part of BNY Mellon Asset Management, which says a record number of global pension funds and endowments are planning to change asset managers as they try to reduce risk.
They are doing this by cutting back on active management and bumping up their exposure to indexing and longer duration bond strategies, according to MTM, which reports an increase in the number of transition managers put in place in the second quarter of the year, compared to the first. Europe and Australia are seeing the biggest number of transitions so far.
MTM also bases its prediction on the growing number of inquiries received about the cost and risk of switching managers (up 40 per cent in the first five months of the year).
And just in case that prediction looks a bit self serving, a survey by consultants Greenwich Associates says institutional investors are finally emerging from their long paralysis over the credit crunch and taking a hard look at their allocations and costs. The survey shows two thirds of public pension schemes plan to hire a new manager in the next 12 months and nearly half will fire an existing manager.
If predictions are correct then fund managers may be in for some sleepless nights.