Article: Lonwabo Mtyeku – Community Newsroom Photo Credit: Supplied
Johannesburg, South Africa – 09 December 2025
For pension funds, asset managers, and institutional investors, changing an investment strategy is often a necessary step toward achieving long-term objectives. Yet the true cost of transitioning from one portfolio to another is frequently underestimated. Beneath the visible trading expenses lies a lattice of hidden risks — market impact, information leakage, operational friction and timing mismatches — all of which can erode substantial value.
In South Africa’s increasingly complex financial ecosystem, transition management is emerging as a critical discipline. Still, many institutions continue to treat transitions as administrative tasks rather than sophisticated investment events requiring specialist execution.
Transition Managers: Protecting Value in Motion
“Hiring a transition manager is the best way to tackle the complex process of moving from one investment strategy to another,” says Adam Bateman, Head of Business Development and Strategic Partnerships, Investor Services at Standard Bank Corporate and Investment Banking (CIB).
“A transition manager is hired to efficiently manage the process of moving a portfolio from the legacy environment into the new target environment while managing the risks involved.”
Standard Bank plays a central role in this capability through a five-year alliance with Northern Trust, initiated in 2021. The partnership blends Standard Bank’s intimate understanding of local markets and liquidity with Northern Trust’s global intellectual capital.
“Northern Trust brings nearly 40 years of transition management experience and deep expertise across pre-trade reporting, post-trade reporting, and project management,” Bateman adds. “We complement that with our local insight — the client base, the trading environment, and how liquidity actually behaves in South Africa.”
The Three Pillars of Effective Transition Management
According to David McPhillips, Business Development Manager for Portfolio Solutions at Northern Trust, successful transitions rest on three integrated pillars:
- Project Management
- Reporting
- Execution
“Our job is to optimise these pillars, quantify the risks, and build a strategy to manage them,” says McPhillips. “A transition manager must have the technology, the systems, and the depth of expertise to support every stage of the transition — you need an entire dedicated team behind it.”
The Hidden Cost of Poor Execution
Transition execution often fails not because of visible fees, but because of the implicit costs embedded in market behaviour.
“From a trading point of view, you’re trying to manage market impact versus opportunity cost for the fund,” explains Kagiso Matlala, Equity Sales Trader at Standard Bank. “If you don’t get that right, by the end of the transition you could be lagging your peers by a long way.”
Poorly executed trades can distort market pricing — not only for assets bought or sold during the transition, but for the investor’s entire remaining portfolio.
“If you’re a holder of an asset and it’s badly traded, the effect goes beyond what you sold,” Matlala notes. “Your broader holdings lose value too. That ripple effect compounds.”
Transparency: The Anchor of Risk-Aware Transitions
“The main value an effective transition manager adds is transparency,” says Bateman. “They help portfolio managers understand all potential costs and risks — explicit costs like trading commission, and implicit costs linked to market impact and liquidity.”
South Africa’s relatively illiquid markets heighten the need for confidentiality and precision.
“You want to be as discreet as possible,” says Matlala. “Especially with illiquid assets. The fewer people in the room, the better.”
Execution Does Not End at the Trade
The settlement chain is another major source of risk.
“It doesn’t stop at the trade,” Matlala emphasises. “If the back-end processes aren’t aligned, clients face overdraft costs, settlement delays, or failed trades. We manage the full chain to ensure a clean handover.”
Cost-Efficient by Design
Standard Bank’s approach also considers investor cost sensitivity.
“We don’t charge a separate project fee,” Bateman explains. “Our fees are built into the trading commission — costs the client would incur anyway. In most cases, partnering with experts ends up costing less than managing the transition internally.”
A Growing Need in an Evolving Market
Although transition management is not new in South Africa, it remains significantly underutilised. Many institutions still perceive transitions as back-office exercises, overlooking how small inefficiencies can compound into material performance drag.
“As funds become more complex, gain offshore exposure, and navigate evolving regulation, expert-led transitions are only going to grow in importance,” Bateman concludes. “Our role is to make these strategy changes work operationally. It’s not just about moving assets — it’s about applying knowledge, experience, and disciplined execution to preserve the value clients have built.”
