Budget transitions a myth
A new research report into the burgeoning portfolio transition management business has uncovered a surprisingly large gap between the costs quoted for transitioning funds from one manager to another, and the actual costs of the process.
The study, conducted by theFrank Russell Company, found the average performance slippage during transitions was 99 basis points over and above the cost estimate provided to clients by transition managers.
Russell Investment Management’s client executive Rob Ciro says the goal of the exercise was to see if low cost estimates of transition management actually resulted in low cost transitions.
“Clearly they do not, and clients generally were unaware that such a substantial gap exists,” Ciro says.
The study looked at transition events initiated by more than 100 superannuation funds based in Australia, the United States, Canada, the UK and continental Europe between the thrid quarter of 1999 and the firsttquarter of 2001.
“This [study] suggests that typical cost estimates have little relationship to the results that superannuation fund trustees and investment managers are likely to achieve,” Ciro says.
Recommended for you
Technology firm Iress and investment manager Challenger have formed a strategic partnership to launch an adviser solution to better serve their retiring clients.
There have only been a “handful” of opportunities in the last 20 years when infrastructure has looked as cheap relative to equities as it does now, according to Lazard, making it a viable option to provide portfolio security amid market volatility.
The Australian Financial Complaints Authority has reported an 18 per cent increase in investment and advice complaints received in the financial year 2025, rebounding from the previous year’s 26 per cent dip.
EY has broken down which uses of artificial intelligence are presenting the most benefits for wealth managers as well as whether it will impact employee headcounts.
