Administration June 5, 2009

Research and Due Diligence Function Increasingly Important

June 5, 2009 (PLANSPONSOR.com) - With the continued evolution of the unified managed account (UMA) and a product-neutral portfolio construction environment, the due diligence and research function is taking on an increasingly important role, according to the 2Q 2009 Issue of The Cerulli Edge—Managed Accounts Edition.
Reported by

Cerulli points out that analysts are now responsible for manager and strategy and determining the appropriateness of implementation of that strategy within a vehicle type.

According to a press release, highlights from the Cerulli report include:

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

  • High turnover and lack of experience are the most frequent asset manager complaints about analysts in research and due diligence groups. Cerulli has found, however, that this perception of inexperience tends to be overstated.
  • Quantitative measures are regularly the initial test for weeding out managers from product searches, even though qualitative measures are often of greater overall importance to sponsor due diligence groups.
  • Cerulli analysts contend that due diligence teams will need to increase the focus on the balance sheets of asset managers to ensure the stability of the asset management firm and its employees.

In its Due Diligence issue Cerulli uses data from its first quarter proprietary survey of sponsor research and due diligence groups to provide insight into how these groups are staffed and structured. It also examines the process these groups use when evaluating managers for acceptance onto platforms and provides metrics around which factors play the largest role in determining who makes the cut.

The second half of the issue contains updated data for the U.S. managed accounts industry through the end of the first quarter of 2009.

The Cerulli Edge—Managed Accounts Edition can be ordered from here .

«