Transition Management
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Transition Management supports institutional investors through structural changes to achieve the desired portfolio exposure in a timely, risk controlled and cost effective manner. Catalysts for such transitions include asset allocation, manager and benchmark changes, through to scheme mergers and moves to liability driven investment strategies.
Employing a transition manager can reduce risk, cost and the administrative burden on the client. This is achieved while seeking to preserve the value retained in the portfolio, thus helping to maximize fund performance.
Key features & benefits | How it works | Did you know? | Our philosophy
Key features & benefits
- Maintain portfolio exposure during asset reallocations
- Preserve asset value
- Reduce operational risk through outsourcing operational burden
- Remove manager timing risks through delivering centralized project management
- Source efficient liquidity
- Minimize total costs
How it works
Risk reduction through methodical and systematic processing of a transition is key. The J.P. Morgan approach to transition management can be divided into four phases:
- Strategy development: The transition manager works with the customer to understand transition objectives, conducts analysis on preliminary portfolios, provides cost estimates and devises the preliminary trade execution strategy and transition plan.
- Planning: Documentation is completed. The transition manager then coordinates with all involved parties and conducts detailed planning meetings, identifies in-kind transfers and finalizes optimal trading strategies.
- Execution: The transition manager may engage in one or all of the following, first implementing in-kind transfers, then internal and external crosses where appropriate and finally executing open market trades. Cash flows and currency transactions are coordinated, and settlement is assured throughout. Unwanted risks are hedged using derivatives such as futures and ETFs where appropriate. The trade process is managed to minimize implementation shortfall.
- Performance analysis: The transition manager produces the post trade report showing all elements of costs and comparing the pre trade estimates with the actual outcome. Finally, the post trade review with the client restates the initial objectives and constraints outlined during the pre trade meeting and discusses the success of meeting those objectives.
Did you know?
J.P. Morgan has been assisting institutional investors restructure their investment portfolios for more than 20 years.
J.P. Morgan's Transition Management Group carefully mitigates potential conflicts of interest through various measures, including physical separation and segregation of information. However, the group partners with other areas of the firm to leverage the strength of J.P. Morgan's global capabilities in risk management, trade execution, research and analysis, technology, operations and global custody to provide efficient solutions for our customers.
J.P. Morgan dedicates a Transition Manager and a Project Manager to each transition ensuring continuity and capacity of coverage. J.P. Morgan supports our global client base from centers in Europe, North America and Asia.
Our philosophy
J.P. Morgan’s transition management philosophy is to leverage our depth of experience, technology, innovation, research, and multi asset class trading skills to provide transition solutions that preserve the assets of our institutional clients. In implementing this philosophy we act with the highest level of professionalism and integrity, maintain transparency to the client throughout the process, and foster open, early and continuous dialogue with all parties to ensure the greatest potential for a planned and successful transition.
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Transition Management Provider of the Year, 2010, Professional Pensions