Products March 7, 2011

State Street Launches Collateral Tracking Service

March 7, 2011 (PLANSPONSOR.com) - State Street Corporation announced the launch of a new Collateral Tracking service that helps asset managers and owners accurately assess and manage counterparty risk.
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Clients can now receive up-to-date reporting on the location and status of all collateral movements regardless of where the assets are held.   

According to the announcement, the Collateral Tracking service expands the traditional core custody function of acting on direction from the asset manager to move collateral, including cash or securities, in and out of an account. The enhanced service automates a previously manual process, which required asset owners to contact each broker or investment manager individually to determine the outstanding collateral at any point in time.   

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With the new service, clients can send their collateral instructions to State Street’s proprietary collateral tracking hub, which automatically initiates the process of tracking the status and location of all outstanding collateral. Additionally, the service’s fully customizable reporting allows clients to schedule reports to run systematically or upon request, using any combination of date range, advisor, client, counterparty, fund, or product type.   

“The Collateral Tracking service provides clients with settlement status updates and event monitoring information to increase transparency and mitigate counterparty risk exposure.” said Patrick Centanni, executive vice president and head of Global Product Management at State Street, in the announcement.  

“State Street’s new collateral tracking capabilities are a core component of our derivatives strategy, which is designed to address the unique challenges our clients face in the derivatives market today,” said Jeff Conway, executive vice president and head of Investment Manager Operations Servicing at State Street. “State Street’s derivative servicing suite now includes end-to-end OTC and exchange traded derivatives processing, collateral management, and independent valuations.”
Administration March 7, 2011

Consultants Expect ‘New Normal’ Economy

March 7, 2011 (PLANSPONSOR.com) – Investment consultants, expecting lower capital market returns and more volatility, support broader asset diversification and custom target-date strategies for defined contribution plans.
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A news release said that was the bottom line of a new PIMCO survey. Almost two-thirds of consultants expect a continuing “new normal” economic environment of lower capital market returns and similar or higher volatility than in the past, according to PIMCO. The majority of consultants believe that active investment management is important for all asset classes surveyed except large-cap U.S. equity, while a slight majority (55%) of consultants also believe that tactical asset allocation within a target-date strategy is at least somewhat important.

Almost all of the consultants (89%) surveyed offer custom target-date consulting services to their clients. In fact, 46% of consultants said that creating custom glide path structures is one of their top areas of business growth. What’s more, 90% believe that varying company demographics should drive unique glide paths, especially for larger organizations. Whether it be designing a custom strategy or selecting a packaged product, evaluating the glide path structure was ranked by consultants as the most important selection criterion.

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Overall, consultants reported continued growth in their defined contribution businesses.

Other findings from the survey include:

  • Consultants are split evenly on whether stable value will grow or decline in prevalence, with the vast majority (82%) anticipating plan sponsors to evaluate the investment managers underlying their stable value offerings.
  • About 78% of consultants believe their clients prefer to retain retiree assets in their plan, and about a third (32%) expect their clients to add a “deemed IRA” to their plans, allowing the consolidation of participant and spousal IRAs within the plan.
  • Most consultants (85%) said the addition of a retirement income option is likely in the next two years, yet most noted that discussions are moving slowly.

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