Industry Updates

State Street has no plans to sell asset management business as ETFs drive 23% AUM jump

Following proposed merger talks with Invesco

Theo Andrew

State Street office building

State Street has said that it has no plans to sell its asset management business as inflows into its ETF products boosted AUM by 23% in the year to September 30.

Speaking during its Q3 earnings call, the firm’s executives would not comment on reports that the asset manager was seeking to sell its fund business, emphasising the importance the arm is for the company.

“We like the business, and we like our business. Its performance has continued to improve and it is now at least average if not above average in terms of the market and continues to grow in what are secularly growing areas, particularly fixed-income ETFs,” Eric Aboaf, chief financial officer at State Street said.

“We think it is an attractive business, it helps us strategically from a portfolio perspective and for many years it has been a laboratory for us to test a few things for the rest of the marketplace. Our overriding goal would be to continue to participate in the business and we continue to believe we can improve performance.”

State Street Global Advisors, the asset management unit, had $3.9trn in assets under management (AUM) at the end of Q3, flat on the previous quarter but a 26% increase on the 12 months previous.

ETFs saw inflows of $140bn across the US and EMEA over the quarter, mainly driven by its fixed income products, well up on the $92bn it pulled in over the same period last year.

Recent reports have fuelled speculation that the asset manager was looking to offload its asset management to Invesco, potentially creating a new ETF behemoth with a 16% market stake.

A report by Citi, published earlier this month, suggested the merger would not be in the best interest of Invesco, adding the most likely course of action would be for the firm to stay its current course, focusing on driving stronger flows, delivering margin improvement and reducing its debt levels.

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