Majority of Institutional Investors Have Strong
Confidence in Asset Managers Navigation of The Crisis and Ability
to Deliver Returns
State Street Corporation (NYSE: STT) today unveiled new research
which shows that institutional investors still retain high levels
of confidence in their asset managers amid the COVID-19 crisis.
Globally, 76% of institutional investors stated that they have
faith in their asset managers’ ability to navigate the crisis,
while a similar percentage of respondents (74%) rated the
communication and support from their asset managers as either
‘strong’ or ‘very strong.’
The research, conducted by Core Data in April 2020, surveyed 250
investment professionals at pension funds, endowments and
foundations, insurance companies, sovereign wealth funds and other
institutions managing assets globally. The study collated their
views on the impact of the COVID-19 pandemic and how asset managers
have handled the crisis.
Globally, market commentary and strategic views from asset
managers have been overwhelmingly viewed as the most important ways
managers can help institutional investors (76%). 32% of
institutional investors would like better support from their
managers in this area. Around one-third of investors are keen to
get more information on ‘investment opportunities assessment’ (36%)
and ‘timing for action and reaction’ (34%).
Another important form of support from asset managers was
‘proactive and responsive relationship managers’ (45%). The rising
importance of technology during the crisis due to social distancing
and lockdown measures meant that 44% of respondents also valued
managers’ use of technology to communicate important updates.
“In a more challenging operational environment, asset managers
globally have continued to show their value to institutional
investors by providing important insights and leveraging technology
to communicate those views,” said John Lehner, global head of Asset
Manager Segment at State Street. “Though, there appears to be an
opportunity for asset managers to provide more strategic views and
forecasts through technology, such as podcasts, webinars, video
conference calls and online presentations.”
Equities most popular asset class, despite concerns of prolonged
recession
Accounting for the high levels of coronavirus-induced market
volatility in the first quarter of 2020, 64% of institutional
investors admit they may fail to meet their short-term targets.
Nevertheless, over half (56%) of them believe that they will still
meet their long-term investment objectives.
“COVID-19 took both investors and managers by surprise,” said
Lehner. “Despite concerns about managers’ ability to predict the
impact of the crisis and the hit it might have on short-term
investment objectives, it is also clear that there is strong
support for asset managers to navigate the crisis and deliver
returns in the long term.”
Despite market volatility, more than half of institutional
investors (52%) globally are looking to increase allocation to
equities in the next three to six months as they hunt for value.
This was followed by appetite to increase allocations to active
investments (35%), private credit (35%) and cash/money market funds
(31%).
The majority of institutional investors around the world do not
expect a rapid ‘V-shaped’ recovery from the crisis, with two-thirds
(66%) not expecting economic activity to return to normal before
2021 or even later. There is also widespread doubt that government
and central bank interventions to alleviate the crisis will lead to
a faster recovery than after the Global Financial Crisis in 2008,
with 51% of respondents saying it is too early to tell and 15%
anticipating a slower recovery.
“The findings reaffirm the mismatch during this crisis between
expected economic and equity market performance,” said Lehner.
“While institutional investors are braced for a long economic
recession and slow recovery, almost 41% expect equities to recover
by the end of September 2020, increasing to 59% by the end of
2020.”
The pandemic has also created major challenges for back office
functions, with the survey revealing that 37% of institutional
investors found securities valuations ‘challenging’ or ‘extremely
challenging’ during the crisis. This was followed by liquidity
(34%), timely reporting (34%) and cash forecasting (30%).
About State Street Corporation
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 $31.86 trillion in assets
under custody and/or administration and $2.69 trillion* in assets
under management as of March 31, 2020, State Street operates
globally in more than 100 geographic markets and employs
approximately 39,000 worldwide. For more information, visit State
Street's website at www.statestreet.com.
*Assets under management as of March 31, 2020 includes
approximately $50 billion of assets with respect to which State
Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as
marketing agent; SSGA FD and State Street Global Advisors are
affiliated.
Investing involves risk including the risk of loss of
principal.
The information provided does not constitute investment advice
and it should not be relied on as such. It should not be considered
a solicitation to buy or an offer to sell a security. It does not
take into account any investor's particular investment objectives,
strategies, tax status or investment horizon. You should consult
your tax and financial advisor. All material has been obtained from
sources believed to be reliable. There is no representation or
warranty as to the accuracy of the information and State Street
shall have no liability for decisions based on such
information.
The views expressed in this material are the views of State
Street through the period ended May 27, 2020 and are subject to
change based on market and other conditions.
This news announcement contains forward-looking statements as
defined by United States securities laws, including statements
about the financial outlook and business environment. Those
statements are based on current expectations and involve a number
of risks and uncertainties, including those set forth in State
Street's 2015 annual report and subsequent SEC filings. State
Street encourages investors to read the corporation's annual
report, particularly the section on factors that may affect
financial results, and its subsequent SEC filings for additional
information with respect to any forward-looking statements and
prior to making any investment decision. The forward-looking
statements contained in this press release speak only as of the
date hereof, June 8, 2020 and the company will not undertake
efforts to revise those forward-looking statements to reflect
events after this date.
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02111-2900.
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without State Street’s express written consent.
© 2020 State Street Corporation - All Rights Reserved
Expiration Date: 6/30/2021
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Brendan Paul 401 664-9182 BPaul2@StateStreet.com
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