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BNY Mellon branches out transition mgt
25 June 2013
The bank is seeing higher demand for transition management services from large investment management firms as many broker-dealers are leaving the transition management business as a result of regulation
BNY Mellon is expanding its transition management capabilities to serve large investment management companies that typically use outside firms to manage some or all of their investment strategies.
Such companies may use networks of sub-advisors to manage investment companies registered under the Investment Company Act of 1940 (40 Act Funds).
The firm will provide the same services offered to its traditional asset-owner clients such as pension funds, sovereign wealth funds, endowments, and foundations. Now BNY Mellon has formed a registered investment advisor so it can provide its comprehensive suite of services to the large investment management firms, such as insurance companies.
“We’re seeing growing demand for transition management services from insurance companies and other financial intermediary complexes that manage 40 Act Funds,” said Mark Keleher, CEO of BNY Mellon Beta & Transition Management.
“These complexes increasingly are recognising the potential benefits of new ways to minimise transaction costs and manage the investment and operational risks associated with overseeing such programmes.”
Keleher noted that while the utilisation of transition management for large portfolio changes has been widely accepted by pension funds and other institutions that own the assets under management, it has been less widely adopted by financial institutions with sub-advisory platforms.
Many of these investment management firms that have used transition management have historically used their existing broker-dealers. However, recent regulatory changes are causing many of these broker-dealers to quit the business, Keleher observed, and as a result, demand is rising for transition managers that are registered investment advisors.