Blackstone Alternative Asset Management And Legg Mason Choose State Street To Service Liquid Alternative Funds

State Street Corporation (NYSE: STT) today announced that it has been selected by Blackstone Alternative Asset Management (BAAM) and Legg Mason for liquid alternatives fund servicing. Liquid alternatives refer to alternative investment strategies that are available through investment vehicles such as mutual funds, ETFs or closed-end funds that provide daily, weekly or biweekly liquidity. In the US, liquid alternatives commonly take the form of Securities and Exchange Commission registered investment companies, often referred to as 40 Act funds. State Street offers reporting, compliance, accounting, custody, settlement and analytics services to liquid alternative fund managers and also services 14 of the top 25 liquid alternatives funds 1.

“Liquid alternatives present both opportunities and challenges for asset managers including distribution, organization and operations,” said Alan Greene, executive vice president at State Street. “Our fully integrated technology platform takes care of the day-to-day back office functions of collateral management and offers one-stop shopping for reporting, compliance, accounting, custody, settlement and analytics. By taking the operational risk off their shoulders, we can help our clients focus on harnessing value from new sources.”

“We appreciate State Street’s partnership with BAAM for the launch of our first liquid alternative fund,” said Art Liao, chief financial officer of BAAM. “The goal of implementing hedge fund strategies within the 40 Act rules in a multi-manager framework of hedge fund managers is extremely complex and underscores the importance of having the right partners making meaningful contributions.”

Liquid alternatives can be a viable way for both retail and institutional investors to help create a diversified investment portfolio that manages risk and achieve risk-adjusted returns. Nevertheless, many investors still harbor mistaken assumptions about them.

“When considering liquid alternatives, education is critical,” said Will Kinlaw, senior managing director and head of portfolio and risk management research at State Street Global Exchange. “Alternative asset managers must match product innovation with product education and help investors do their homework to determine if liquid alternatives are a good option for their portfolio. Whether investors are looking for diversification, liquidity, performance or transparent fee structures, understanding the desired objective is first and foremost.”

In a recently launched series of Google+ videos, State Street demystifies liquid alternatives and explains how they can help:

  • Provide more liquidity through daily subscriptions and redemptions
  • Offer more transparency in alignment with 40 Act rules and disclosures
  • Offer different fee structures compared to the “2 and 20” base and performance fees typically found in the traditional alternative fund strategies
  • Help stabilize portfolios by delivering differentiated returns

To view the videos, click here. State Street is the number one service provider of mutual funds by assets under administration in the US 2 and the number one service provider of hedge funds by assets under administration globally 3.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $27.5 trillion in assets under custody and administration and $2.4 trillion* in assets under management as of March 31, 2014, State Street operates in more than 100 geographic markets worldwide, including the U.S., Canada, Europe, the Middle East and Asia. For more information, visit State Street’s web site at

* Assets under management include the assets of the SPDR® Gold ETF (approximately $34 billion as of March 31, 2014), for which State Street Global Markets, LLC, an affiliate of State Street Global Advisors, serves as the distribution agent.

Investing involves risk including the risk of loss of principal

Hedge funds (or other alternative investment funds) are designed only for sophisticated investors who are able to bear the risk of the loss of their entire investment. An investment in a hedge fund should be viewed as illiquid and interests in hedge funds are generally not readily marketable and are generally not transferable. Investors should be prepared to bear the financial risks of an investment in a hedge fund for an indefinite period of time. An investment in a hedge fund is not intended to be a complete investment program, but rather is intended for investment as part of a diversified investment portfolio. Typically interests in a hedge fund are not registered under the US Securities Act of 1933, as amended (the Securities Act), and the fund is not registered as an investment company under the US Investment Company Act of 1940, as amended (the Investment Company Act), and as such, investors will not be afforded the protections of those laws and regulations. A prospective investor should carefully review all offering materials associated with a hedge fund, including the risk factors, and should consult his or her own legal counsel and/or financial advisor prior to considering an investment in a hedge fund.

Diversification does not ensure a profit or guarantee against loss.

1 Morningstar Direct as of June 20142 As ranked by Money Management Executive’s Mutual Fund Servicing Guide 20143 As ranked by eVestment’s Alternative Fund Administrator Survey 2014


Copyright Business Wire 2010

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