SSgA: Asset Management Fees Up, AUM Down

(October 18, 2011) — Boston-based State Street Global Advisors (SSgA) has revealed that while its management fees increased in the year ended September 30, its assets under management fell during the period.

The firm — whose business has been negatively impacted by volatile markets and record-low interest rates — noted that despite overall assets under management dropping by 4% in the year ended September 30, asset management fees brought in by SSgA were up 17% in the same period. According to the firm, investment management fees at SSgA reached $229 million, up from $196 million from a year earlier.

“The increase in management fees was attributable primarily to increases in the average of month-end valuations in worldwide equity markets, the 2011 acquisition of the Bank of Ireland asset management business, and net new business installed,” State Street said in an earnings release.

Servicing fees also increased during the period, as the firm reported a 10% increase in fees over the past year to $1.11 billion in the third quarter 2011.

Meanwhile, SSgA’s parent company State Street Corp. reported a net income of $543 million, or $1.10 a share, compared with $540 million, or $1.08 a share, in the year-before period. Revenue in the third quarter totaled $2.43 billion, up 5% from $2.3 billion in the year-earlier period.

Looking ahead to 2012, State Street chairman, president and chief executive Joseph Hooley said: “As we approach the end of 2011 and plan for 2012, we expect to face a prolonged, worldwide low interest-rate environment, constrained economic growth, anticipated higher capital requirements, and increased regulatory and compliance costs. We are addressing these challenges by remaining focused on our clients and growing our business, while controlling expenses with a goal of continuing to generate positive operating leverage.”

He added: “We expect to face a prolonged, worldwide low interest-rate environment, constrained economic growth, anticipated higher capital requirements, and increased regulatory and compliance costs.”