As Liquid Alternatives Grow in Popularity, Product Innovation Must be
Matched by Education
Company Website:
http://www.statestreet.com
BOSTON -- (Business Wire)
State Street Corporation (NYSE: STT) today announced that it has been
selected by Blackstone Alternative Asset Management (BAAM) and Legg
Mason for liquid alternatives fund servicing. Liquid alternatives refer
to alternative investment strategies that are available through
investment vehicles such as mutual funds, ETFs or closed-end funds that
provide daily, weekly or biweekly liquidity.In the US, liquid
alternatives commonly take the form of Securities and Exchange
Commission registered investment companies, often referred to as 40 Act
funds. State Street offers reporting, compliance, accounting, custody,
settlement and analytics services to liquid alternative fund managers
and also services 14 of the top 25 liquid alternatives funds1.
“Liquid alternatives present both opportunities and challenges for asset
managers including distribution, organization and operations,” said Alan
Greene, executive vice president at State Street. “Our fully integrated
technology platform takes care of the day-to-day back office functions
of collateral management and offers one-stop shopping for reporting,
compliance, accounting, custody, settlement and analytics. By taking the
operational risk off their shoulders, we can help our clients focus on
harnessing value from new sources.”
“We appreciate State Street’s partnership with BAAM for the launch of
our first liquid alternative fund,” said Art Liao, chief financial
officer of BAAM. “The goal of implementing hedge fund strategies within
the 40 Act rules in a multi-manager framework of hedge fund managers is
extremely complex and underscores the importance of having the right
partners making meaningful contributions.”
Liquid alternatives can be a viable way for both retail and
institutional investors to help create a diversified investment
portfolio that manages risk and achieve risk-adjusted returns.
Nevertheless, many investors still harbor mistaken assumptions about
them.
“When considering liquid alternatives, education is critical,” said Will
Kinlaw, senior managing director and head of portfolio and risk
management research at State Street Global Exchange. “Alternative asset
managers must match product innovation with product education and help
investors do their homework to determine if liquid alternatives are a
good option for their portfolio. Whether investors are looking for
diversification, liquidity, performance or transparent fee structures,
understanding the desired objective is first and foremost.”
In a recently launched series of Google+ videos, State Street
demystifies liquid alternatives and explains how they can help:
-
Provide more liquidity through daily subscriptions and redemptions
-
Offer more transparency in alignment with 40 Act rules and disclosures
-
Offer different fee structures compared to the “2 and 20” base and
performance fees typically found in the traditional alternative fund
strategies
-
Help stabilize portfolios by delivering differentiated returns
To view the videos, click here.
State Street is the number one service provider of mutual funds by
assets under administration in the US2 and the number one
service provider of hedge funds by assets under administration globally3.
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 $27.5 trillion in assets under custody and administration
and $2.4 trillion* in assets under management as of March 31, 2014,
State Street operates in more than 100 geographic markets worldwide,
including the U.S., Canada, Europe, the Middle East and Asia. For more
information, visit State Street’s web site at www.statestreet.com.
* Assets under management include the assets of the SPDR® Gold ETF
(approximately $34 billion as of March 31, 2014), for which State Street
Global Markets, LLC, an affiliate of State Street Global Advisors,
serves as the distribution agent.
Investing involves risk including the risk of loss of principal
Hedge funds (or other alternative investment funds) are designed only
for sophisticated investors who are able to bear the risk of the loss of
their entire investment. An investment in a hedge fund should be viewed
as illiquid and interests in hedge funds are generally not readily
marketable and are generally not transferable. Investors should be
prepared to bear the financial risks of an investment in a hedge fund
for an indefinite period of time. An investment in a hedge fund is not
intended to be a complete investment program, but rather is intended for
investment as part of a diversified investment portfolio. Typically
interests in a hedge fund are not registered under the US Securities Act
of 1933, as amended (the Securities Act), and the fund is not registered
as an investment company under the US Investment Company Act of 1940, as
amended (the Investment Company Act), and as such, investors will not be
afforded the protections of those laws and regulations. A prospective
investor should carefully review all offering materials associated with
a hedge fund, including the risk factors, and should consult his or her
own legal counsel and/or financial advisor prior to considering an
investment in a hedge fund.
Diversification does not ensure a profit or guarantee against loss.
1 Morningstar Direct as of June 2014
2 As ranked by Money
Management Executive’s Mutual Fund Servicing Guide 2014
3 As ranked
by eVestment’s Alternative Fund Administrator Survey 2014
CORP-1053
Contacts:
State Street Corporation
Anne McNally, +1 617-664-8576
aemcnally@statestreet.com
@StateStreet
Source: State Street Corporation
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