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State Street Survey Provides Insights on Institutional Investors’ Views on Asset Managers Amidst COVID-19

Company Release - 6/9/2020 8:15 AM ET

Majority of Institutional Investors Have Strong Confidence in Asset Managers Navigation of The Crisis and Ability to Deliver Returns

BOSTON--(BUSINESS WIRE)-- State Street Corporation (NYSE: STT) today unveiled new research which shows that institutional investors still retain high levels of confidence in their asset managers amid the COVID-19 crisis. Globally, 76% of institutional investors stated that they have faith in their asset managers’ ability to navigate the crisis, while a similar percentage of respondents (74%) rated the communication and support from their asset managers as either ‘strong’ or ‘very strong.’

The research, conducted by Core Data in April 2020, surveyed 250 investment professionals at pension funds, endowments and foundations, insurance companies, sovereign wealth funds and other institutions managing assets globally. The study collated their views on the impact of the COVID-19 pandemic and how asset managers have handled the crisis.

Globally, market commentary and strategic views from asset managers have been overwhelmingly viewed as the most important ways managers can help institutional investors (76%). 32% of institutional investors would like better support from their managers in this area. Around one-third of investors are keen to get more information on ‘investment opportunities assessment’ (36%) and ‘timing for action and reaction’ (34%).

Another important form of support from asset managers was ‘proactive and responsive relationship managers’ (45%). The rising importance of technology during the crisis due to social distancing and lockdown measures meant that 44% of respondents also valued managers’ use of technology to communicate important updates.

“In a more challenging operational environment, asset managers globally have continued to show their value to institutional investors by providing important insights and leveraging technology to communicate those views,” said John Lehner, global head of Asset Manager Segment at State Street. “Though, there appears to be an opportunity for asset managers to provide more strategic views and forecasts through technology, such as podcasts, webinars, video conference calls and online presentations.”

Equities most popular asset class, despite concerns of prolonged recession

Accounting for the high levels of coronavirus-induced market volatility in the first quarter of 2020, 64% of institutional investors admit they may fail to meet their short-term targets. Nevertheless, over half (56%) of them believe that they will still meet their long-term investment objectives.

“COVID-19 took both investors and managers by surprise,” said Lehner. “Despite concerns about managers’ ability to predict the impact of the crisis and the hit it might have on short-term investment objectives, it is also clear that there is strong support for asset managers to navigate the crisis and deliver returns in the long term.”

Despite market volatility, more than half of institutional investors (52%) globally are looking to increase allocation to equities in the next three to six months as they hunt for value. This was followed by appetite to increase allocations to active investments (35%), private credit (35%) and cash/money market funds (31%).

The majority of institutional investors around the world do not expect a rapid ‘V-shaped’ recovery from the crisis, with two-thirds (66%) not expecting economic activity to return to normal before 2021 or even later. There is also widespread doubt that government and central bank interventions to alleviate the crisis will lead to a faster recovery than after the Global Financial Crisis in 2008, with 51% of respondents saying it is too early to tell and 15% anticipating a slower recovery.

“The findings reaffirm the mismatch during this crisis between expected economic and equity market performance,” said Lehner. “While institutional investors are braced for a long economic recession and slow recovery, almost 41% expect equities to recover by the end of September 2020, increasing to 59% by the end of 2020.”

The pandemic has also created major challenges for back office functions, with the survey revealing that 37% of institutional investors found securities valuations ‘challenging’ or ‘extremely challenging’ during the crisis. This was followed by liquidity (34%), timely reporting (34%) and cash forecasting (30%).

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 $31.86 trillion in assets under custody and/or administration and $2.69 trillion* in assets under management as of March 31, 2020, State Street operates globally in more than 100 geographic markets and employs approximately 39,000 worldwide. For more information, visit State Street's website at www.statestreet.com.

*Assets under management as of March 31, 2020 includes approximately $50 billion of assets with respect to which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.

Investing involves risk including the risk of loss of principal.

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.

The views expressed in this material are the views of State Street through the period ended May 27, 2020 and are subject to change based on market and other conditions.

This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those set forth in State Street's 2015 annual report and subsequent SEC filings. State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, June 8, 2020 and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

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Expiration Date: 6/30/2021

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Brendan Paul
401 664-9182
BPaul2@StateStreet.com

Source: State Street Corporation