Pavilion assists institutional clients with the implementation of their portfolio changes – whether it’s developing a strategy to manage the assets on a temporary basis, transitioning the assets from one investment manager to another, altering an asset allocation mix, rebalancing the portfolio for liquidation of positions or for any other reason.
Examples of transition solutions delivered by Pavilion include:
- Temporary asset management: This is a short-term strategy to help clients through a transition between one investment manager and another. The need for it arises when clients want to change investment managers, or need to immediately make an asset allocation decision, but require additional time to find a new investment manager. Until clients have chosen their desired manager, Pavilion can help. We will temporary place client assets in an optimized portfolio that will track, within an agreed upon tracking error, the performance and risk characteristics of a defined benchmark.
- Transition management: This solution helps clients move their current portfolio structure to the desired portfolio structure in the most efficient manner and at the least overall cost to the plan. We view managing the opportunity cost as the key element to a successful transition. While developing appropriate trading strategies to minimize transaction costs (i.e., commission, bid/ask spreads and market impact) is important, it is the costs that arise from the difference in returns between the actual portfolio and the target portfolio that will have the greatest impact on implementation shortfall. If this risk is not properly managed, the opportunity cost will far outweigh transaction costs. Read more.
- Portfolio Rebalancing: Immediately after an asset allocation strategy is implemented, a portfolio begins to “drift”, so it is necessary to continually monitor a portfolio to ensure it remains optimal. Pavilion can provide portfolio monitoring and effective implementation of rebalancing using methods designed by its quantitative research group. These methods transcend the traditional tolerance or calendar-based strategies and incorporate risk measures, liquidity and costs.