State Street targets emerging market acquisitions

* Looking for further asset management buys in active space

* Plans roll-out of BIAM global equity offering

LONDON, Nov 2 (BestGrowthStock) – State Street Global Advisors
(SSgA), the investment arm of custody bank State Street (STT.N: ),
is looking to add investment capabilities in emerging markets
equity and debt as it ramps up its active management offering.

Boston-based State Street, which last month announced its
acquisition of active manager Bank of Ireland Asset Management
(BIAM) for 57 million euros ($79.5 million) in a bid to broaden
its product set, is on the hunt for more European takeovers.

Speaking at a briefing in London on Tuesday, Scott Powers,
chief executive of SSgA, said clients were particularly
interested in fast-growing emerging markets.

He was also seeing a lot more demand for liability-matching
strategies and highlighted active European credit strategies as
a key area of expansion in fixed income.

“There is also a huge demand for active currency management
due to increased volatility across different currencies, and for
investment in real assets such as commodities,” Powers added.

He said that SSgA already had some capabilities in these
areas but was looking to build or acquire others.

Around $1.2 trillion of SSgA’s $1.9 trillion assets are in
passively managed products, with only about $100 billion
actively managed.

SSgA’s active capabilities are concentrated in quantitative
strategies, which use computer models to build portfolios.

Powers acknowledged that the last three years have not been
kind to quant managers across the industry, with many
assumptions used to build their models turning out to be flawed.

The BIAM acquisition was driven by a need to gain access to
fundamental active strategies, which rely on manager
stock-picking skill to deliver outperformance.

Chris Johns, chief executive and chief investment officer
(CIO) at BIAM, will become global CIO of the active fundamental
equity business at SSgA.

About 120 people are expected to transfer from BIAM and the
business will be rebranded as SSgA Ireland.

Powers identified BIAM’s global equity capability as “ready
to export” to SSgA’s international clientele.

State Street has a goal of doubling its non-U.S. revenue
over the next five years and wants half its assets under
management at SSgA to come from outside North America.

(Editing by Sinead Cruise and Michael Shields)

State Street targets emerging market acquisitions