Over the past decade, institutional adoption of index-based strategies has soared for a range of reasons: liquidity management, as a complement to high active and alternative allocations, and for exposures where investors believe structural alpha is not present. To meet the demand, asset managers have formulated new low-cost offerings, driving the competition up and investment management fees down. This dynamic has amplified the emphasis on fees as the key selection criterion for both managers and funds. While fees may be an obvious dimension for evaluation, it offers a limited picture of investor value — portfolio construction, performance, trading execution, and vehicle optionality.
Indexing is core to our business at State Street Global Advisors, representing over 1,800 institutional investors and $2.8 trillion in assets, underpinned by an index heritage dating back to 1978. We recognize that our investors are looking for reliability from their index manager, and as such, we continue to invest in our business to ensure the low-cost precision of performance and tracking that our investors expect— from low expense ratios, to managing index changes and cash flow, through to optimizing the impact of trading costs. Our experience managing index portfolios, the infrastructure that we have built and evolved to support the business, and the scale we have achieved have culminated in a one-stop-shop for our clients that delivers consistent results. Across the hundreds of index products we manage, over 98% of our index portfolios track within their tolerance limits.1
Source: State Street Global Advisors. Data as of March 31, 2023.