State Street to Service an Aussie Fund, Launches New FI Strategies

by Trefis Team
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State Street Corporation (NYSE:STT) has been appointed as the custodian by SunSuper, replacing National Australia Bank Asset Servicing (NAS). [1] The $18 billion industry fund has cited the growing number and increasing sophistication of investment management as the reason to change to State Street, ending its decade long relationship with NAS. The global custodian will provide a range of investment management and administration services, including compliance monitoring, tax and accounting services, alternative asset reporting, etc. The transaction will take effect in the first half of next year. State Street recently bagged a few other contracts from PIMCO and Alliance Bernstein that you can read about in our article ‘State Street Brings in New Business, Remains Focused on Core Growth’. State Street competes with BlackRock Inc. (NYSE:BLK) and BNY Mellon (NYSE:BK).

See our full analysis of State Street’s stock here

State Street Global Advisors (SSgA) has introduced two new fixed income policies based on new benchmark indices, which the company helped Barclays to develop. [2]

It has obtained exclusivity rights for two years to track the indices passively. The indices allocate weights according to financial soundness, profitability and leverage of the bond issuers instead of market capitalization. It uses return on assets, current ratio and interest coverage to measure the financial operations and strength of the company.

The strategies are expected to yield better results compared to the traditional passive fixed income strategies as more financially stable and healthier firms will get a higher weighting and reduce the impact of worsening credit positions of companies with large market caps. We believe this new approach will give the investment management business of the company a much-needed boost.

Our price estimate for State Street is $46, which is around 30% above the current market price.

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Notes:
  1. Sunsuper appoints State Street as custodian, Financial Standard []
  2. State Street Global Advisors launches two fixed-income strategies based on alternative weighted indices, hedgeweek []
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