State Street unveils new research

State Street Corporation has unveiled new research insights into the costs and implementation of moving portfolios between fund managers and changing asset allocations.

Launched at the company’s annual research conference in Sydney, the new research examined US $1 trillion in assets transitioned during a five-year timeframe.

The research found transition management executions that use State Street’s internal crossing liquidity were approximately 25 per cent of the equivalent cost of a traditional market-based transaction that did not use State Street’s internal liquidity.

State Street Global Markets in Asia senior managing director David Goodman said the depth and breadth of the data-set used also gave State Street the ability to provide clients with clear indications of the likely range of potential costs for transitions across various circumstances.

“A big issue for clients and for the industry as a whole is how to accurately assess the effectiveness of a transition manager,” Goodman said.

“Through this research we are now developing new measures which will enable clients to more accurately assess whether their transition was a good result, taking into account the nature of the portfolio, market conditions as well as the skill of the transition manager.”

The research data included more than 3,000 transitions and approximately 1.6 million individual securities.

The research was conducted by State Street Global Markets and its research partner State Street Associates. Results were measured using an implementation shortfall methodology, which compares each individual transaction’s execution price to the previous day’s close.

State Street Corporation had $US1.6 trillion in assets under management as at September 30, 2006.