A successful transition event isn’t just about moving assets — it’s about precision, strategy, and minimizing risk. Without the right execution, costs can escalate, market impact can grow, and performance can suffer.
Our latest virtual panel, “Navigating Change: Expert Insights on Transition Management,” is designed to help with that effort. Over the course of the conversation, our speakers unpacked the most effective transition management strategies for mitigating risk, optimizing execution, and setting the right benchmarks for success.
This panel featured the following industry leaders:
• Kerry Richardville – CFA, Senior Institutional Advisor at Mariner
• Bryan Gibbs – SVP, Director of Transition Management, CAPIS
• David Choate – Chief Operating Officer, CAPIS (Moderator)
Couldn’t join us? Here are a few of the key takeaways from the discussion and be sure to check out the recording below.
Transition Managers: Not Just for the Big Moves
While many assume transition management is reserved for large asset transfers, our panelists emphasized its value in smaller, more nuanced events – especially during volatile market conditions. Event transitions under $5M may benefit from transition management, depending on the asset class and timing. “No matter the size of the event, there’s usually a value-add for a transition manager,” said Gibbs.
For Richardville, determining whether to move forward with transition management starts with evaluating the characteristics of the event – including size, asset class liquidity, and the players involved in the process (e.g., legal teams, custodians for both legacy and target portfolios). Since there can be a lot of operational detail involved, from NDAs to transition contracts to custodial processes, nailing down those details and getting everyone aligned is critical before you even get to trade date.
The Impact of Market Volatility
In fluctuating markets, even smaller scale transitions become higher stakes. Volatility introduces greater tracking error and opportunity costs, making transition management not just helpful, but essential. “Market conditions pre-trade absolutely matter,” said Richardville. “I had a client who was partially moving from active to passive management in February 2020 – right in the thick of COVID. They were buying about $2.8 million in index funds. Typically, I’d have the manager liquidate and buy directly, but due to the volatility, we decided not to take the chance of getting burned by major market moves. We brought in a transition manager, and they arranged to place the buy on the same day as the sell. That outcome was far better for the client.”
Gibbs agreed, adding additional context. With tariff moves causing volatility and the VIX spiking twice in less than 6 months, “the standard deviation bands widen around mean cost estimates,” he explained. “That stresses the importance of mimicking the target portfolio as best we can to minimize opportunity cost risk.” CAPIS uses a myriad of techniques, like dark pools and venue changes, to limit market footprint and reduce impact.
From Plan to Execution
Before any trades are made, a well-structured pre-trade process sets the foundation. Gibbs laid out the three core pillars:
1. Goals and timeframe: Understand constraints like hard start/end dates and investor priorities
2. Pre-trade analysis: Identify risks, especially around illiquid or complex positions
3. Communication with all parties: From custodians to outgoing/target managers, everyone must be in sync.
He also spoke to the value of operational preparedness, trimming illiquid positions and balancing speed and exposure objectives. Gibbs touched briefly on the special considerations in fixed income due to valuation gaps and benchmarking limitations, and how a transition manager can help illuminate true portfolio value and improve strategy accordingly.
Richardville touched on explicit and implicit costs, stating that having cost transparency before and after helps reinforce trust in your partner, especially when something turns out differently than expected.
What Success Looks Like: Key Benchmarks
Post-trade evaluation hinges on measuring against the proper benchmark. Choosing the right one – MOC (Market on Close), VWOP (Volume Weighted Average Price), arrival prices or previous day’s close – depends on the event’s structure and asset type. Richardville spoke to her experience using Market on Close as a benchmark, stating, “We’ve used MOC for transitions from active to passive because we’re typically executing both the selling of the individual securities and the mutual fund buy at the end of the trading day.” She cited an example of a healthcare client with a small-cap healthcare tech stock which was relatively illiquid, where VWAP made more sense due to the need to closely monitor market impact.
Choate and Richardville also spoke to how transition managers are benefiting from operational changes like the move to T+1. “We used to work with mutual fund companies under special contracts to ensure same-day buys – but it was certainly an extra step that was not guaranteed,” she said. “Since the move to T+1, that’s no longer necessary in most cases, which is a really nice operational development.”
Gibbs cautioned against relying too heavily on any one benchmark, citing some of MOC’s limitations: “You can show zero implicit cost if you push everything to the close and use that as the benchmark – but that doesn’t always tell the full story,” he said. “We compare actual results to the agreed-upon benchmark from pre-trade, and we show everything – how much we traded in every 10-minute window, what that looked like in terms of cost and volume.”
To close out, the panelists re-emphasized the need to communicate the full scope of the transition event clearly and transparently, comparing results to the agreed-upon benchmarks.
Interested in learning more about this topic? Check out our transition management resource center.
