Australian Asset Managers Brace for Change: State Street Survey

Thursday, August 27, 2015 8:55 am EDT

Dateline:

SYDNEY

Public Company Information:

NYSE:
STT
"The most enterprising asset managers are responding by bringing more to the table in their client relationships. Delivering greater value doesn’t just mean achieving consistently high returns, it means forging closer partnerships with investors based on a transparent dialogue around risk and performance"

SYDNEY, 25 August 2015 — Australian asset managers and their counterparts in Asia Pacific (APAC) face on-going pressure to develop customised solutions for institutional clients who are shifting portfolio management in-house at an ever increasing rate, a new report[1] by State Street Corporation (NYSE: STT) has found.

Almost three quarters of asset managers (71 percent) surveyed in APAC as part of the report, titled “Opportunities for Optimism? A New Vision for Value in Asset Management”[2] said this growing demand is shaking up their business models.

The report shows that a major response to this challenge will be product innovation, with successful managers catching the next wave of growth by offering better services, solutions and value to their clients.

Of the 400 asset managers surveyed by FT Remark, 125 (31 percent) were based in APAC. Of the APAC respondents, 45 (36 percent) were from Australia. Approximately three quarters of those surveyed in the region had assets under management of at least US$5 billion.

“Growing client demand for bespoke solutions requires many asset managers to adjust their business models, particularly as clients move in-house and insist on more personalized service to help them manage their money,” said Paul Khoury, head of State Street Global Services for Australia and New Zealand.

With the US Federal Reserve likely to tighten monetary policy this year, the report showed that asset managers in APAC plan to adjust their allocations in the first year of a rising interest rate environment. Nearly two-thirds (62 percent) of regional respondents plan to expand their offering of fixed income alternative strategies to meet heightened investor demand while 57 percent will increase use of derivatives to hedge against interest rate risk.

Managing risk is a major concern for institutions around the world, with 72 percent of asset managers in the global survey saying their conversations with clients have evolved to focus more heavily on understanding risk and implementing strategies to manage it.

“The most enterprising asset managers are responding by bringing more to the table in their client relationships. Delivering greater value doesn’t just mean achieving consistently high returns, it means forging closer partnerships with investors based on a transparent dialogue around risk and performance,” Khoury said.

Overall, asset managers are positive about the opportunities for growth despite growing competition and potential disruption from new entrants to the industry such as technology or non-financial services firms.

Eighty-four percent of APAC-based respondents forecast increased opportunities for profitable growth over the next year, while 82 percent agreed they were likely to face direct competition from an industry disruptor in the next five years.

“Non-traditional market entrants could mount a serious challenge to asset managers in the region and globally,” Khoury said.

To download a copy of the report, please click here.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $28.7 trillion in assets under custody and administration and $2.4 trillion* in assets under management as of June 30, 2015, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s web site at www.statestreet.com.

* Assets under management include approximately $26.7 billion as of June 30, 2015, for which State Street Global Markets, LLC, an affiliate of SSGA, serves as the distribution agent.

The views expressed in this material are the views of State Street through the period ended July 28, 2015 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 2013 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, July 28, 2015 and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

GMGSHK-0266

[1] State Street 2015 Asset Manager Survey conducted by FT Remark in April and May 2015. Unless otherwise noted, all data in this summary originates from this survey.

[2] See footnote 1.

Contact:

Kate Fields
+61 2 8249 1121
kfields@statestreet.com
@StateStreet

Media Contacts

Contact a member of the State Street Media Relations Team.

Social Media

Business Wire NewsHQ℠