SSgA Enhances Investment Capabilities to Meet Evolving Client Challenges
Dynamic Market Environment Drives Need for New Solutions
BOSTON--(BUSINESS WIRE)-- Investors today face increasingly complex investment challenges, according to State Street Global Advisors (SSgA), the asset management business of State Street Corporation (NYSE: STT ) . Confronted with historically low rates, market uncertainty and the challenge of finding returns amid a complex regulatory environment, investors are demanding new investment approaches and strategies from asset managers. To help clients navigate these ever-changing market conditions, SSgA is strengthening its capabilities in both active and passive strategies.
“The markets of today are fundamentally different than those of the past due to the financial crisis and unprecedented monetary intervention, which has impacted investment returns and interest rates,” said Scott Powers, president and CEO of SSgA. “In this dynamic market environment, we are evaluating our current strategies, building on our core business strengths and expanding into areas that will enable us to effectively deliver tailored solutions. The end result is an integrated investment approach focused on helping clients to achieve their objectives.”
Building on Beta
“SSgA is committed to being a leader in core indexing, advanced beta and ETFs and we believe strongly in the value of passive exposure,” said Rick Lacaille, executive vice president and chief investment officer at SSgA. “While we see tremendous potential to build upon our beta franchise, we also believe in the importance of active management and the essential role that active and alternative strategies can play in enhancing portfolio returns through alpha generation.”
According to research conducted by State Street1, forty-five percent of asset owners reported that low returns on traditional assets have increased their organization’s appetite for alternative investment strategies to meet funding demands. Year-end 2012 AUM for global alternatives reached record levels of $6.6 trillion, having grown over the last six years at a rate of over seven times that of traditional asset classes2.
Further aligning its leadership with the client challenges that exist today, SSgA is combining core teams in active quantitative developed and enhanced equity. It is expanding the depth of its fixed income strategies to extend further on the credit spectrum targeting areas such as structured credit, high yield and emerging market debt. Managed fixed income and cash assets worldwide account for $19 trillion or 37 percent of total managed assets, benefiting from trends following the financial crisis3.
“We believe that the boundaries between fixed income disciplines are blurring and that a broad view is beneficial,” continued Lacaille. “For instance, it is clear that cash management is moving away from a traditional money market framework and that optimal portfolio management now incorporates skills typically associated with managing longer dated fixed income securities. In addition, we believe that active quantitative and enhanced equity strategies operate best as a single discipline and combining them will allow us to serve clients with deeper perspective and resources."
As part of this approach, SSgA is combining its cash and fixed income capabilities under the leadership of Steve Meier, CIO head of cash, who will become CIO of fixed income, currency and cash. Active quantitative developed and enhanced equity will also be combined under Ted Gekas, currently head of global enhanced equity, who will take a new role as CIO and global head of active quantitative equity. As part of these changes, Ali Lowe, CIO, global equities, will leave the firm at the end of 2013 after a transition period. Kevin Anderson, currently CIO and head of fixed income, will assume the role of head of investments for the Asia Pacific region based in Hong Kong. He replaces Lochiel Crafter who was recently appointed as head of the Asia Pacific region, succeeding Bernard Reilly, who has taken the role of global head of strategy for SSgA.
“These promotions reflect strong individual and team performance across strategies and these individuals have spent 15 years on average at SSgA,” said Lacaille. “Looking ahead, we remain committed to building upon our talent. Additionally, in 2012, 70 percent of our active quantitative investment strategies beat their benchmarks4 and our cash business has seen continued inflows during a time when many of our peers have been losing assets.5”
Enhancing Speed to Market
To maximize the effectiveness of its quantitative research, SSgA is integrating its Advanced Research Center (ARC) and dedicated IT support into their respective investment teams. Bringing research closer to the investment process will accelerate SSgA’s ability to generate and implement actionable ideas with greater speed and efficiency in volatile and dynamic markets.
About State Street Global Advisors
State Street Global Advisors (SSgA) is a global leader in asset management. The firm is relied on by sophisticated investors worldwide for its disciplined investment process, powerful global investment platform and access to every major asset class, capitalization range and style. SSgA is the asset management business of State Street Corporation, one of the world’s leading providers of financial services to institutional investors.
1 State Street, “The Asset Owners' Perspective: Evolving Investment and Operational Models,” December 2012
2 McKinsey & Company research. Alternatives include hedge funds, private equity and investments in real estate, infrastructure and commodities in a variety of vehicles including limited partnerships, fund of funds, managed accounts, and increasingly, mutual funds and undertakings for collective investment in transferable securities, or UCITs
3 McKinsey & Company research
4 SSgA Finance 12/31/12. Past performance is not a guarantee of future result.
5 iMoneyNet, Inc., 12/31/2012
Australia: State Street Global Advisors, Australia, Limited (ABN 42 003 914 225) is the holder of an Australian Financial Services Licence (AFSL Number 238276). Registered office: Level 17, 420 George Street, Sydney, NSW 2000, Australia Telephone: +612 9240-7600 • Facsimile: +612 9240-7611
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Netherlands: State Street Global Advisors Netherlands, Adam Smith Building, Thomas Malthusstraat 1-3, 1066 JR Amsterdam, Netherlands. Telephone: 31 20 7085600, Facsimile 31 20 7085601, SSgA Netherlands is a branch of State Street Global Advisors Limited.
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