State Street | Best ETF Administrator – Equity ETFs in Canada | Best Overall ETF Administrator in Canada | Best ETF Administrator – Fixed Income ETFs in Canada
Jeffrey Sardinha, Managing Director – Head of ETF Solutions – Americas, State Street, answers our Q & A interview on the firm’s wins in the ETF Express Canadian awards.
Why do you think you won this award?
Short answer is we pride ourselves on being a leader. We have supported ETFs for 30 years and have seen each and every successful innovation and attempted innovation. We have lived each new milestone and tail event. We get ETFs. We focus on key themes like Innovation, Best Practice, Technology, People, and being a trusted Thought leader.
Our scale and expertise get us a front row seat on market trends which are then translated into service innovation and enhancements. Considering we support every major market with a single suite of proprietary technologies we typically have capability in a market prior to the trend hitting that market. Our continued history of ETF firsts prove that our strategy is a competitive advantage for State Street and more importantly for clients of State Street.
At State Street we took it a step further with the acquisition of Charles River Development, adding front office capabilities to our already top tier middle and back office capabilities. Creating the first real front to back offering all under one roof. We are starting to see the benefits of our ALPHA offering with more efficient, timely data which is important considering where we think this industry is headed.
Lastly, our ETF team is second to none. Having a unique global and market specific product team focused solely on the growth, expansion, and support of an ETF allows us to support the best interests of the industry and our clients. We do that by educating the marketplace on key trends, best practice, and considerations via thought leadership papers, podcasts, panel discussions, surveys, and webinars.
What is the size and scale of your business at the moment?
State Street is the largest third-party ETF administrator/Custodian globally and the only administrator supporting clients in every major ETF market. We are entrusted with over 48 per cent of the world’s ETF assets. In Canada that number exceeds 73 per cent of the Canadian ETF market’s assets.
What trends have you seen over the past year?
Active ETFs were a key trend in 2022 and continue this year. In 2022, half the flows in Canada went to actively managed ETFs from a baseline of 27 per cent of assets. Similar flow statistics are occurring all over the globe.
We see a mix of regulatory tailwinds like CRM2 (Client Relationship Model 2) in Canada, fee pressures globally, and a growing number of options from leading Active managers launching ETFs helping spur growth.
Where do you see the ETF industry going in terms of trends over the coming year?
Keeping with the active theme I think actively managed ETFs will continue to increase the outsized portion of flows they have been receiving. In markets like Canada, I think that outsized portion will be larger than most.
We will see an increase in ETF as a share class of an existing product in Canada while south of the border the US is just getting started and has seen its first filing for an actively managed ETF share class.
Fixed Income can now compete without zero-interest rate policy hanging over it. We should expect an increased percentage of flows and launches into fixed income to take advantage of the rate environment and an ETFs natural ability to provide simple access to complex fixed income strategies.
