State Street ETF Assets Dropped 14% Last Year in Down Market

January 20, 2023

State Street Corp.’s exchange-traded funds business held fewer assets at the end of 2022 than in the previous year, as the worst markets since the 2008 financial crisis sent investors scurrying for safe havens, cutting into ETF inflows and management fees.  

State Street, the third-largest U.S. ETF issuer, said ETF assets under management slumped 14% to $1.02 trillion by the end of 2022, compared to $1.18 trillion at 2021’s end, according to an earnings release.  

The SPY fund issuer’s fourth-quarter U.S.-based ETF inflows dropped 18% to $32.5 billion, compared to the $39.5 billion in the year-ago quarter, according to ETF.com data. That was a reversal from the third-quarter's $14 billion in outflows, $5 billion of which were domestic outflows, for the product suite in the third quarter.  

Overall assets under management shrank 16% from the year-ago quarter to $3.5 trillion, due to “lower period-end market levels, institutional net outflows and the impact of currency translation, State Street Vice Chairman and Chief Financial Officer Eric Aboaf said in an earnings call with analysts and investors.  

Among ETFs, equity funds took the biggest hit, with managed assets slumping 16% to $817 billion. Meanwhile, assets in fixed income funds dipped 0.7% to $134 billion compared to the same period the year prior. 

State Street has 141 ETFs that trade on U.S. markets, including the oldest and largest fund, the SPDR S&P 500 ETF Trust (SPY), which currently holds $371.8 billion. SPY posted the largest losses in domestically traded ETFs in 2022, shedding $12 billion, according to ETF.com data.  

Management Fees Dip 

The firm’s management fees dropped 5.6% to $1.9 billion in 2021 from $2.1 billion the year prior, primarily due to outflows from long-term funds. 

Big ETF issuers have reported a mixed bag of results this quarter. Charles Schwab Corp. this week reported ETF assets dropped 6%, while ETF-related revenue increased. BlackRock Inc., the largest ETF issuer, saw inflows slow alongside a 15% decline in ETF-related income. 

Overall revenue rose 3% to $3.2 billion, beating Bloomberg-polled analysts’ estimates of $3.1 billion, bolstered by net interest income. Shares of Boston-based State Street rose 4.7% to $84.28 Friday.  

 

Contact Shubham Saharan at [email protected]        

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