State Street has no plans to relinquish its asset management arm, executives said, as the company revealed exchange traded funds had buoyed a 26 per cent jump in assets under management in the year to September 30.
The executives, speaking during the company’s third-quarter earnings call, declined to comment on reports that the manager had been in dealmaking talks with rivals about its fund business. Instead, they underscored how important the unit was for the company.
“It’s a business that helps us strategically from a portfolio perspective and for many years now it’s been a bit of a laboratory for us to test out different things that give us an insight into the rest of the marketplace,” said Eric Aboaf, the company’s chief financial officer. “Our overriding goal would be to continue to participate in the business, assuming that we can continue to improve performance.
“We like the business, and we particularly like our business,” he added.
State Street’s asset management unit, State Street Global Advisors, had $3.9tn in assets under management as of September 30, unchanged from three months earlier but 26 per cent more than 12 months previously, buoyed by a surge of inflows into both ETFs and cash, according to the company’s earnings report.
SSGA’s ETF franchise crossed $1tn in assets at the end of the third quarter, the manager reported.
Most of that money — $988bn — is in US ETFs, according to Morningstar Direct. Those funds collected $62bn in net inflows during the year ended September 30, according to the Chicago-based researcher. SSGA’s $28.6bn US mutual fund line-up, meanwhile, added $240m in net inflows over the same period.
Speculation that a deal was being explored involving State Street’s asset management arm centred on reports that State Street has been in merger talks with Invesco. State Street options for its asset management unit have also included a combination with UBS, Bloomberg reported in December.
State Street announced last month that it would acquire Brown Brothers Harriman’s custody and asset servicing business. The $3.5bn deal will allow the company to supplant BNY Mellon as the world’s largest custody bank, with $5.4tn in assets under custody.
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