Sovereign Wealth Funds (SWFs) — institutions comprising government-owned asset pools that are neither public pension funds nor traditional reserve assets — differ in size, age, structure, funding sources, policy objectives and risk/return profiles. Central banks are similarly diverse, varying in proportional size and charged with managing different types of fiscal and monetary challenges. One thing they all have in common: In today’s challenging environment, SWFs and central banks need new organizational structures to promote better communication, cooperation and investment practices in both good times and bad.
Comprehensive services for SWFs and central banks
State Street provides SWFs and central banks with a wide range of investment servicing, management, and research and trading services. For sovereign clients such as SWFs, central banks, government agencies and supranational institutions, State Street provides technical and strategic advice and skills transfer.
Our dedicated staff, including some of the world’s leading experts on sovereign funds, maintains relationships with approximately 40 SWFs and foreign exchange relationships with many of the world’s leading central banks.
SWFs and central banks use State Street Global Markets’ portfolio solutions to optimize their performance with portfolio analysis and diagnostics, rebalancing and risk monitoring, strategy implementation, and trading. Our industry-leading transition management team offers an agency-based fiduciary partnership that ensures cost effective and efficient interim exposure management, liquidity management, interim asset allocation overlay, and cash equitization.
Enhanced custody model
State Street’s Enhanced Custody Model (ECM) provides a unique alternative to traditional prime brokerage in the operation of long/short mandates. Based on custody and securities borrowing and lending, ECM helps reduce costs, potentially enhance returns, and create operational and risk efficiencies.
A robust and time-tested currency management model and a full suite of related research and advisory services are dedicated to facilitating investment in currency as an asset class in pursuit of sustainable, uncorrelated returns. Currency hedging helps mitigate the currency risk embedded in investment portfolios.
Securities lending can potentially enhance returns without adding undue risk exposure, helping institutional investors seek optimal risk-adjusted returns by lending their securities to borrowers in return for payment. State Street has provided securities lending to clients since 1974, and today services clients worldwide from 11 regional trading offices.
Central banks and SWFs use State Street for rules-based foreign exchange (FX) execution that helps them automate their FX execution strategy for security-related FX orders. Our global sales and trading teams bring you account coverage, advisory services, order handling and market-making in a broad range of currencies around the clock from centers throughout the world. You can take advantage of a full range of currency products, including spot FX, forwards, options and non-deliverable forwards. We also bring you one of the market’s leading electronic executable streaming price services. And our macro strategy team draws on unique research to make actionable investment recommendations.
Electronic trading platforms
State Street’s eExchange offers electronic trading solutions for foreign exchange (FX), US treasury securities, futures, money markets and exchange traded funds (ETFs). Because we do not trade or take positions in the market, you can rest assured that we are facilitating execution and lending transparency to your processes.
Our research offering blends a multi-asset class, multi-market strategy team with leading academic and industry experts in a unique collaboration that seeks to enhance and preserve portfolio values for clients. A broad spectrum of proprietary investor behavior indicators illuminates the activities of investors representing some 15 percent of the world’s investable assets. Innovative portfolio and risk management tools incorporate the most advanced analytics and modeling technologies, facilitating the construction of portfolios that optimize absolute and relative performance simultaneously.