State Street’s Vision Focus Report Examines Exchange Traded Funds
January 11 2010 - 9:00AM
Business Wire
State Street Corporation (NYSE: STT), one of the world’s leading
providers of financial services to institutional investors, today
released its Vision Focus report on trends in the usage of exchange
traded funds (ETFs) by institutional investors. The report notes
that while ETFs currently account for nearly USD $1 trillion in
assets under management, institutional investors often do not take
full advantage of these flexible investment tools.
“In this time of economic uncertainty, market volatility and
increased scrutiny over investment management fees, ETFs are
gaining traction by enabling investors to express a tactical view
on an industry, commodity or asset class while providing
well-diversified, low-cost market exposure,” said Anthony Rochte,
senior managing director at State Street Global Advisors.
“Institutions are increasingly discovering the benefits of ETFs.
However, to fully maximize their potential, continuing dialogue
with institutions and providing educational resources describing
the widening array of uses for these offerings is essential” Rochte
added.
State Street’s Vision Focus report provides examples of current
methods of employing ETFs by some institutional investors for
optimal effect, including cash equitization, completion and
core-satellite strategies, strategic asset allocation and tax
management, among other uses. It also highlights regional
differences in the development of the ETF market and provides a
discussion of recent regulatory changes.
“While product innovation has been significant throughout the
industry over the past two decades, the rush of new products has
been a source of confusion, even for seasoned institutional
investors,” said James Ross, senior managing director at State
Street Global Advisors. “With a heightened level of product
development, short performance records and fluctuating regulations
for some of these product offerings, selecting the best ETFs can be
a challenge. ETFs with reasonable spreads, sufficient liquidity,
low expenses, minimal tracking error and well-constructed
underlying indices provide the best prospects for success,”
according to Ross.
State Street is one of the largest providers of exchange traded
funds globally with assets under management totaling more than USD
$204 billion as of December 31, 2009.
State Street's Vision Series addresses topics that are impacting
the financial services industry. Previous reports have included
alternative investments, sovereign wealth funds, Islamic finance
and derivatives. To obtain a copy of this Vision Focus report on
exchange traded funds or other State Street Vision reports please
visit www.statestreet.com/vision.
About State Street Global Advisors
State Street Global Advisors, the investment management business
of State Street Corporation (NYSE: STT), delivers investment
strategies and integrated solutions to clients worldwide across
every asset class, investment approach and style. With $1.7
trillion in assets under management at September 30, 2009, State
Street Global Advisors has investment centers in Boston, Hong Kong,
London, Montreal, Munich, Paris, Singapore, Sydney, Tokyo, Toronto
and Zurich, and offices in 26 cities worldwide. For more
information, visit State Street Global Advisors at
www.ssga.com.
About State Street
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors
including investment servicing, investment management and
investment research and trading. With $17.9 trillion in assets
under custody and administration, and $1.7 trillion in assets under
management at September 30, 2009, State Street operates in 27
countries and more than 100 geographic markets worldwide. For more
information, visit State Street’s website at
www.statestreet.com.
ETFs trade like stocks, are subject to investment risk and will
fluctuate in market value.
In general, ETFs can be expected to move up or down in value
with the value of the applicable index. Although ETFs may be bought
and sold on the exchange through any brokerage account, ETFs are
not individually redeemable from the Fund. Investors may acquire
ETFs and tender them for redemption through the Fund in Creation
Unit Aggregations only, please see the prospectus for more
details.
Frequent trading of ETFs could significantly increase
commissions and other costs such that they may offset any savings
from low fees or costs.
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