State Street Vision Paper Reveals Asset Owners’ New Perspective on Asset
Report Highlights Renewed Focus on Liquidity and Risk Management
BOSTON -- December 04, 2012
State Street Corporation (NYSE: STT) today announced the findings of its new
Vision paper entitled, “The Asset Owners’ Perspective: Evolving Investment and
Operational Models.” The report explores how the continued volatility of
global financial markets has identified weaknesses in investment portfolios,
causing institutional investors to reconsider their asset allocation
strategies. As a result, investors are utilizing new approaches to liquidity
management to modify their portfolio mix and balance the need for liquidity
with the need for returns.
State Street’s research found:
*The top actions taken by asset owners to address the liquidity crunch
include more vigorous stress testing and the revisions of
liquidity-related investment policies.
*Fixed income investing remains a growth area among defined-benefit pension
plans. Thirty-nine percent of corporate plans surveyed expect to increase
allocations to corporate investment-grade debt and 30 percent of public
plans anticipate expanding allocations to emerging market debt investments
in the coming year.
*Nearly 84 percent of respondents still consider the endowment model of
investing a highly effective framework for today’s markets.
*Forty-five percent of asset owners reported that low yields on traditional
assets have increased their organization’s appetite for alternatives,
particularly among institutions at the smaller end of the market.
*Data integration remains a top operational challenge. Nearly half of
respondents cited challenges with achieving a comprehensive analysis of
their portfolio and two-thirds expect their data management needs to
increase over the next three years.
“Many asset owners are now placing liquidity high among their priorities for
asset allocation decisions and reevaluating their liquidity management
approach,” said Dan Farley, senior managing director and chief investment
officer for State Street Global Advisor’s Investment Solutions Group. “This
has led to the adoption of new asset allocation frameworks that focus on
optimizing the trade-off between risk and return based on the unique
characteristics of each portfolio. Asset owners must carefully consider their
approach to this equation and consider more dynamic methods of generating
returns using various liquidity strategies.”
“The two biggest challenges for asset owners right now are risk management and
investment complexity. These are industry challenges that must be met head on
with increased transparency and new technologies to help investors manage
complex exposures while remaining focused on generating returns,” said Rebecca
Schechter, senior vice president and head of Foundations and Endowments at
State Street’s Vision Series addresses key trends and developments impacting
the financial services industry. Previous reports have focused on regulatory
implications, emerging markets, alternatives and technology innovation. To
download a copy of this Vision Focus report or others in State Street’s Vision
series of in-depth reports, please visit www.statestreet.com/vision.
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
$23.4 trillion in assets under custody and administration and $2.1 trillion in
assets under management at September 30, 2012, State Street operates in 29
countries and more than 100 geographic markets. For more information, visit
State Street’s web site at www.statestreet.com.
*This AUM includes the assets of the SPDR Gold Trust ($75.3 billion as of
September 30, 2012), for which State Street Global Markets, LLC, an affiliate
of State Street Global Advisors serves as the marketing agent.
State Street Corporation
Alicia Curran Sweeney, +1 617-664-3001
Press spacebar to pause and continue. Press esc to stop.