State Street’s Vision Focus Report Examines Exchange Traded Funds

Report Asserts Explosive Product Growth and Untapped Potential for Institutional Investors

Monday, January 11, 2010 9:00 am EST



Public Company Information:


BOSTON--(BUSINESS WIRE)--State Street Corporation (NYSE: STT), one of the world’s leading providers of financial services to institutional investors, today released its Vision Focus report on trends in the usage of exchange traded funds (ETFs) by institutional investors. The report notes that while ETFs currently account for nearly USD $1 trillion in assets under management, institutional investors often do not take full advantage of these flexible investment tools.

“In this time of economic uncertainty, market volatility and increased scrutiny over investment management fees, ETFs are gaining traction by enabling investors to express a tactical view on an industry, commodity or asset class while providing well-diversified, low-cost market exposure,” said Anthony Rochte, senior managing director at State Street Global Advisors. “Institutions are increasingly discovering the benefits of ETFs. However, to fully maximize their potential, continuing dialogue with institutions and providing educational resources describing the widening array of uses for these offerings is essential” Rochte added.

State Street’s Vision Focus report provides examples of current methods of employing ETFs by some institutional investors for optimal effect, including cash equitization, completion and core-satellite strategies, strategic asset allocation and tax management, among other uses. It also highlights regional differences in the development of the ETF market and provides a discussion of recent regulatory changes.

“While product innovation has been significant throughout the industry over the past two decades, the rush of new products has been a source of confusion, even for seasoned institutional investors,” said James Ross, senior managing director at State Street Global Advisors. “With a heightened level of product development, short performance records and fluctuating regulations for some of these product offerings, selecting the best ETFs can be a challenge. ETFs with reasonable spreads, sufficient liquidity, low expenses, minimal tracking error and well-constructed underlying indices provide the best prospects for success,” according to Ross.

State Street is one of the largest providers of exchange traded funds globally with assets under management totaling more than USD $204 billion as of December 31, 2009.

State Street's Vision Series addresses topics that are impacting the financial services industry. Previous reports have included alternative investments, sovereign wealth funds, Islamic finance and derivatives. To obtain a copy of this Vision Focus report on exchange traded funds or other State Street Vision reports please visit

About State Street Global Advisors

State Street Global Advisors, the investment management business of State Street Corporation (NYSE: STT), delivers investment strategies and integrated solutions to clients worldwide across every asset class, investment approach and style. With $1.7 trillion in assets under management at September 30, 2009, State Street Global Advisors has investment centers in Boston, Hong Kong, London, Montreal, Munich, Paris, Singapore, Sydney, Tokyo, Toronto and Zurich, and offices in 26 cities worldwide. For more information, visit State Street Global Advisors at

About State Street

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 $17.9 trillion in assets under custody and administration, and $1.7 trillion in assets under management at September 30, 2009, State Street operates in 27 countries and more than 100 geographic markets worldwide. For more information, visit State Street’s website at

ETFs trade like stocks, are subject to investment risk and will fluctuate in market value.

In general, ETFs can be expected to move up or down in value with the value of the applicable index. Although ETFs may be bought and sold on the exchange through any brokerage account, ETFs are not individually redeemable from the Fund. Investors may acquire ETFs and tender them for redemption through the Fund in Creation Unit Aggregations only, please see the prospectus for more details.

Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.



State Street Corporation
Marie McGehee, 617-664-1898
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Troy Mayclim, 914-686-5599

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