US - A further voice arguing for ‘implementation shortfall’ to be adopted as a common standard for calculation and presentation of portfolio transition management has come from the Frank Russell Company. Without these standards clients can end up with incomplete reporting, the company says.

“Across a broad cross-section of transition reports we have seen, the unreported performance loss is frequently two or three times the reported costs - 50 basis points, 60bps, sometimes more than 1% of assets being moved,” claims Robert Collie, a director with Russell’s implementation services team.

“With an estimated $1.5 to 2 trillion transitioned industry-wide in 2002 alone, the figure on un-reported cost could be staggering,” he says. Investors do not know that this is happening, he claims.

While it is not possible to hold the target portfolio being aimed at straightaway, it is possible to make that portfolio the benchmark against which actual performance is measured, under the ‘implementation shortfall’ measurement basis, he points out.

Writing in the US-published ‘Journal of Performance Measurement’, Collie said he wanted to encourage debate in the industry about the introduction of generally accepted standards.

Through Frank Russell Securities Inc, the company’s broker-dealer subsidiary, some 434 transitions were completed by Russell last year.