State Street Global Services | Best ETF Back Office Tech Provider | Best ETF Middle Office Tech Provider | Best Overall ETF Administrator | Best ETF Administrator – Equity ETFs | Best ETF Administrator – Fixed Income ETFs
Frank Koudelka, Senior Vice President & Global ETF Product Specialist, State Street Investment Services answers the questions on their many wins in this year’s awards.
What is the size and scale of your business at the moment?
State Street currently has 36 clients with over 1,000 ETFs and USD4.4 trillion in assets serviced in the US market. This accounts for approximately 45 per cent of assets serviced in the market. We have 95 clients with close to 3,000 ETFs and over USD5.8 trillion in assets serviced globally. We service approximately 42 per cent of ETFs globally.
What trends have you seen over the past year?
The major trend continues to be what we’ve called ETF 3.0, or the expansion of the market to active managers. During 2024 and into early 2025, we are launching 12 new active managers to the ETF market for the first time.
The trend regarding mutual fund to ETF conversions also continues. Since the first conversion in 2021, the industry has seen about 25 conversions yearly. Right now, we are tracking towards the same for 2024.
The emerging trend is the ability to launch an ETF share class of a mutual fund (subject to regulatory approval). We’ve seen successful launches leveraging the share class structure in Australia, Canada and Europe and we’ve now seen 31 US filings to date.
As far as product trends, ETFs with options strategies continue to proliferate. These are a combination of options employed to drive additional income and others that are using options for downside protection from market risk.
What plans do you have for growing your business over the coming year?
• We believe our positioning covers four key attributes important to our clients.
• We are an innovative leader, always looking around corners to develop capabilities for the long-term. We employ a three-year roadmap to ensure we are investing for the future.
• We are a scale leader, using our size to assist clients implement industry best practice either as they are entering the market, new asset classes or new jurisdictions.
• We are a technology leader, employing global proprietary ETF system capabilities across 14 geographic locations.
• We are a thought leader, providing clients with insights to help them understand trends in the markets they can leverage while building products to serve their investors.
Where do you see the ETF industry going in terms of products over the coming year?
The data shows the market is getting more active. If we look across a number of metrics (products, issuers, flows, assets), this is where the market is seeing the most new interest. As mentioned earlier, options (and other derivatives) are being employed in many products. It’s incumbent on the industry to create further automation regarding non-traditional instruments. I do believe the regulator will approve share class in the coming years, meaning every asset manager will have an easier pathway to launching ETFs.
How will your firm be able to support them?
State Street is at the forefront of innovation and industry change. We will use our position to advocate for automation and by leveraging proprietary, global technology will continue to make changes to support client needs. Our Alpha for ETF capabilities provide a full front-to-back capability making it easier for issuers to manage the entire ETF lifecycle.
Why do you think you won this award?
We are a consultative partner to our clients. They look at what State Street offers them holistically. They see us continuing to invest and lead the industry. As a result, I believe they have rewarded the trust they placed in us with this industry recognition.
