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State Street redomiciles £1.1 billion range in cost drive

by Robert St George on Jan 23, 2014 at 08:49

State Street redomiciles £1.1 billion range in cost drive

State Street Global Advisors (SSgA) is to merge a seven-strong £1.1 billion Irish-registered bond tracker range into an equivalent Luxembourg-domiciled range in a bid to lower costs.

The suite of trackers include the £26 million EMU Government Bond Index fund; £101 million US Corporate Bond Index fund; £153 million EMU Government Long Bond Index fund; £255 million Euro Inflation Linked Bond Index fund; £68 million World Government Bond Index fund; £358 million World Broad Investment Grade Bond Index fund; and £165 million Euro Corporate Bond Index fund.

State Street already has products of the same name registered in Luxembourg for four of the funds – EMU Government Bond Index, World Government Bond Index, World Broad Investment Grade Bond Index, Euro Corporate Bond Index – and will launch new vehicles for the other three.

A State Street spokesperson told Wealth Manager: ‘The merging of seven SSgA Dublin bond products into Luxembourg Sicavs is a move aimed at achieving better levels of operational efficiency, and longer-term cost savings for clients of both the merging and the receiving funds.’

As an example of the potential for cost savings, State Street said that fixed costs were expected to decline as a percentage of assets under management in the larger combined funds. The group added that higher levels of operational efficiency were likely be realised as a consequence of the reduced operational and administrative burden.

State Street argued too that the expanded investor base for the merged funds would reduce the risks posed by large redemptions from single unitholders.

The costs of implementing the transition will be borne by State Street, not the funds themselves.

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