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State Street Releases Vision Reports on Hedge Funds and Private Equity Industry

Date: Thursday, July 2, 2009
Author: Business Wire

Reports Examine Industry Challenges, Long-Term Outlook

BOSTON--(BUSINESS WIRE)--State Street Corporation (NYSE:STT), the world’s leading provider of financial services to institutional investors, today released two papers on alternative investments as part of its Vision series of thought-leadership reports.

The companion Vision papers examine two key components of alternative investments, hedge funds and private equity, and their future prospects amid the global economic downturn.

While both industries have been hard-hit by the financial crisis, they will likely adapt to the changed investment environment and continue to provide significant long-term opportunities for institutional investors, according to State Street.

“With so much debate within these sectors as complexity has heightened over the past year, we want to help identify the actual market conditions and trends that will determine the future of hedge funds and private equity,” said Jack Klinck, executive vice president and global head of State Street’s Alternative Investment Solutions team. “The research and insights presented in these reports will help institutional investors as they make their investing decisions.”

“New Views of the Hedge Fund Industry” cites two major trends affecting the industry: a migration to third-party administration and custody services and increased regulatory oversight. While hedge fund redemptions are expected to continue through 2009, according to the report, “anecdotal evidence suggests that investors are starting to regain confidence.”

“The hedge fund industry will emerge from the financial crisis – smaller, in terms of the number of funds, but eventually larger in terms of assets under management,” the report states.

State Street’s second Vision paper, “Private Equity at the Cross Roads,” notes that although the industry is currently under pressure from the financial crisis and recession, “many believe that private equity is about to enter a new phase of more sustainable growth. Over the long-term, investors and governments will look to private equity for its significant capital resources, management expertise, and high risk tolerance to help restore economic strength as impaired assets are wound down and fresh investments are required for new and expanding businesses.”

The two Vision papers draw on State Street’s extensive knowledge of hedge funds and private equity servicing. State Street’s hedge fund and private equity teams are part of its Alternative Investment Solutions group, which includes more than 2,200 employees worldwide.

With approximately $252 billion in hedge fund assets as of March 31, 2009, State Street provides a complete set of servicing and management solutions for hedge funds, including recordkeeping, fund accounting, valuation, risk management and regulatory reporting.

In private equity, State Street provides full-service fund administration services to more than 400 primary funds with total assets exceeding $137 billion.

To obtain copies of the Vision papers or for more information, members of the press should contact publicrelations@statestreet.com. All other requests should be directed to vision@statestreet.com. Previous reports in State Street’s proprietary Vision series have addressed a range of topics, including the pensions industry, investment operations outsourcing, sovereign wealth funds, the insurance industry, and Islamic finance.

About State Street

State Street Corporation (NYSE: STT) is the world's leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $11.3 trillion in assets under custody and $1.4 trillion in assets under management at March 31, 2009, State Street operates in 27 countries and more than 100 geographic markets worldwide. For more information, visit State Street’s web site at www.statestreet.com.