The Hindu Business Line : State Street-UTI MF tie-up may offer more choices to investors

STATE Street Global Advisors, UTI Mutual Fund's new-found partner, has consolidated its status in the realm of institutional fund management. It has been identified as the largest player of its kind, thanks to the $1 trillion-plus assets handled by it.

UTI MF and the investment management arm of State Street Corporation had in May entered into a tie-up, aimed at developing schemes for local investors. State Street, which would charge a fee for its services, has been mandated to act as an advisor to the country's No. 1 fund house.

The confirmation that State Street is the top player in its category (based on aggregate worldwide institutional assets) follows from a survey conducted among international money managers. It attained the top ranking with net inflows of $179 billion during 2003. Incidentally, for the seventh consecutive year, it has emerged as the largest manager of `institutional tax-exempt assets' in the US, courtesy an asset base of $725 billion.

The development would not be insignificant for Indian investors who are waiting for the UTI MF-State Street combine turn out the first scheme, it is felt. The two parties, which had signed a deal in Kolkata, had stated that the products that may follow the tie-up would have to comply with regulatory standards here.

The tie-up would help investors in terms of providing more choices. State Street, for its part, would rely on the distribution strengths of its Indian partner. The arrangement, the UTI MF top brass had mentioned, would be purely strategic - there would be no sharing of equity stakes.

State Street has, in a recent statement, observed that it has consolidated its ranking by offering a comprehensive set of investment solutions to clients. It recorded organic growth by expanding client base and adding to business sourced from existing clients. About 250 new clients were enrolled, and several new "enhanced indexed and active mandates" were won as well. At the moment, 17 central banks account for over $13 billion assets.

It may be mentioned here that State Street has also claimed that its portfolio of investment solutions mirrors that of its clients. "They cover the entire risk return spectrum, whether they're active, enhanced or passive, traditional or alternative," it has pointed out. State Street has further declared that it is well placed in the context of outsourcing in asset management — an evolving trend.

It has already announced that it has received the single-largest mandate to manage a portfolio of equity and fixed income assets for the UK-based Abbey National Asset Managers.

Abbey is said to have chosen State Street for its capability in managing a wide range of asset classes and complex portfolios.