State Street Global Advisors History and Innovation

State Street Global Advisors has a rich history that dates back to 1978 when it was founded as the investment management arm of State Street Bank and Trust Company.

The company's first product was the SPDR S&P 500 ETF, which was launched in 1993 and became the first US-listed ETF.

This innovative product marked a significant milestone in the development of the ETF market.

State Street Global Advisors has continued to innovate and expand its product offerings over the years, becoming one of the largest and most respected asset managers in the world.

State Street Global Advisors was founded in 1978 in Boston, Massachusetts, as the asset management division of State Street Corporation.

In its early years, the company introduced three initial products: a domestic index fund, an international index fund, and a short-term investment fund.

By 1989, the division had amassed $53 billion in assets under management.

State Street Global Advisors separated from State Street Bank in 1990 to expand globally, with London being its first international location.

The company's mission was to expand its reach beyond the US, and by 1994, it had established 10 more international locations.

By 1999, State Street Global Advisors had grown to 15 international locations.

The company invented the exchange-traded fund (ETF) in 1993 with the introduction of the S&P 500 SPDR product (Ticker: NYSE Arca: SPY).

Assets under management climbed to $161 billion in 1994 and more than quadrupled to $667 billion by 1999.

As of 2006, one-third of assets under management were from non-US investors.

State Street Global Advisors moved its Boston office to the newly completed State Street Financial Center building at One Lincoln Street in 2003.

The company launched the first foreign real estate ETF in 2006 (Ticker: NYSE Arca: RWX), providing investors in the US an easy way to access the international housing and commercial development markets.

Here are the key milestones in State Street Global Advisors' history:

State Street Global Advisors offers a range of products and services to cater to different investment needs.

SSGA creates customized investment strategies for institutions, managing their assets through commingled funds.

The company has 46 ETF investment products in the US market, tracking various indices based on market capitalization, investment style, sector, industry, or commodity.

SSGA also offers 26 Mutual Fund products, divided by investment type, including money markets, bonds, equities, and diversified funds of funds.

State Street Global Services, the securities services division of State Street, handles assets from many classes, including stocks, derivatives, exchange-traded funds, and fixed income assets.

This division provides asset owners and managers with securities services, fund accounting, and administration, handling US$10.2 trillion of middle-office assets.

The SPDR S&P 500 Trust ETF was the first exchange-traded fund (ETF) created in 1993.

Trading on SPDR began on January 29, 1993, marking a significant milestone in the evolution of ETFs.

The company is now one of the largest ETF providers worldwide, a testament to its innovative spirit and commitment to the market.

In 1993, the company revolutionized the investment landscape by introducing the first ETF.

State Street Global Advisors (SSGA) offers a range of products and services to cater to various client needs.

SSGA creates customized investment strategies for institutions and manages their assets through commingled funds, also known as common trust funds.

The company has a significant presence in the ETF market with 46 investment products in the US, tracking various indices based on market capitalization, investment style, sector, industry, or commodity.

These ETFs are also available in other parts of the world, including Belgium, France, Hong Kong, and Singapore under the streetTracks brand.

SSGA has a diverse portfolio of 26 Mutual Fund products, categorized by investment type, including money markets, bonds, equities, and diversified funds of funds, also known as lifestyle funds.

State Street Global Services provides securities services, including custody, corporate actions, fund accounting, and administration services to asset owners and managers.

This division handles assets from various classes, including stocks, derivatives, exchange-traded funds, fixed income assets, private equity, and real estate, with a total of US$10.2 trillion of middle-office assets under management.

In 2017, State Street Global Advisors commissioned and placed a statue titled “Fearless Girl,” depicting a young girl standing across from the famed “Charging Bull” on Wall Street outside the New York Stock Exchange.

The statue was an advertisement for an index fund which comprises gender diverse companies that have a higher percentage of women among their senior leadership.

A nearby plaque called for greater representation of women in the financial services industry.

Some women criticized the statue as "corporate feminism" that violated their own feminist principles.

The artist of the charging bull alleged that the Fearless Girl statue painted his statue in an unintended menacing light.

State Street Global Advisors later sued the artist who crafted the Fearless Girl statue, claiming that the firm and not her owned the rights to the statue’s likeness and name.

State Street Global Advisors has faced its fair share of lawsuits and controversies over the years.

In October 2007, several pension funds sued State Street Corp. for allegedly mishandling several bond funds managed by SSGA. This was just the beginning of a series of lawsuits that would continue to plague the company.

In 2008, State Street Bank was sued by Trust Co. for Fixed Income Funds Investment, which was eventually settled in 2010. The company also faced a class action suit in April 2009, alleging SSGA chose illiquid, leveraged, and risky securities in their short-term, liquid fund products.

In 2017, SSGA agreed to pay over $5 million in back pay and interest to settle allegations the company underpaid women and African-American employees. This settlement was a significant step towards resolving the company's diversity and inclusion issues.

State Street Global Advisors has implemented initiatives to address these issues, including a hiring quota controversy in 2021. The company required special permission to hire white men as part of an effort to triple the number of Black, Asian, and other ethnic minorities in senior positions by 2023.

State Street Global Advisors has faced several lawsuits over the years. In 2007, several pension funds sued the company for allegedly mishandling bond funds managed by State Street Global Advisors (SSGA). This was just the beginning of a series of legal battles.

The company was sued again in 2008 by Trust Co. for Fixed Income Funds Investment, and the case was settled in 2010. This was not an isolated incident, as SSGA was also sued in 2009 for allegedly choosing illiquid, leveraged, and risky securities in their short-term, liquid fund products.

In 2017, the company settled a lawsuit with the Department of Labor for $5 million, agreeing to pay back pay and interest to female and African-American employees who were underpaid. This settlement was a significant step towards addressing the company's diversity and inclusion issues.

Here's a summary of the lawsuits against State Street Global Advisors:

It's worth noting that these lawsuits have led to significant changes within the company, including a focus on diversity and inclusion.

Non-disclosure of short position can have serious consequences, as seen in the case of State Street Global Advisors. They were fined $5 million for not disclosing certain initial investors taking a short position on portions of a $1.65 billion hybrid collateralized debt obligation.

This fine was the result of an investigation by the Massachusetts Securities Division. The investigation was likely triggered by suspicions of insider trading or other forms of market manipulation.

State Street Global Advisors (SSGA) has a wealth of knowledge to share through its episodes.

Chuck LeVine and Eric Viliott, both Vice Presidents and Senior Portfolio Managers at SSGA, have participated in episodes discussing tax awareness.

Their expertise has been valuable in exploring the rising role of ETFs in insurance portfolios, covering topics like liquidity and efficiency.

In episode 219, we're talking tax aware with Chuck LeVine, a Vice President and Senior Portfolio Manager at SSGA. He's joined by Eric Viliott, also a Vice President and Senior Portfolio Manager at SSGA.

Chuck LeVine brings a wealth of experience to the table, having worked at SSGA. Eric Viliott has a similar background, having also worked at the company for some time.

This episode is all about tax aware investing, and Chuck LeVine is the perfect person to guide us through it.

In this episode, SSGA's Ben Woloshin and Brad Kotler dive into the world of ETFs in insurance portfolios. They explore the rising role of ETFs, discussing their benefits in terms of liquidity and efficiency.

ETFs are becoming increasingly popular in insurance portfolios, and for good reason. They offer a more efficient way to manage investments, allowing for greater flexibility and control.

The conversation also touches on innovative use cases for ETFs in insurance portfolios. We learn about the various ways ETFs can be used to create customized investment portfolios.

Regulatory considerations are also a key aspect of the discussion, with Ben and Brad sharing their expertise on the latest developments in this area.

State Street Global Advisors' financials are impressive, with over $3.5 trillion in assets under management. This makes them one of the largest investment management companies in the world.

Their revenue has consistently grown over the years, reaching $4.1 billion in 2020. This growth is a testament to their commitment to innovation and excellent client service.

The company has a strong track record of paying dividends to its shareholders, with a dividend yield of 2.1% in 2020.

Investment Servicing is a crucial aspect of the financial industry. State Street Global Services is a leading provider of securities services, handling assets from various classes, including stocks, derivatives, exchange-traded funds, fixed income assets, private equity, and real estate.

They offer a wide range of services, including custody, corporate actions, fund accounting, and administration. This includes financial reporting, tax, compliance, and legal services.

State Street Global Services handles a massive amount of assets, with a staggering $10.2 trillion in middle-office assets. This makes them a trusted partner for asset owners and managers.

State Street Corporation has a strong financial foundation, with revenue increasing steadily over the years. The company's revenue reached $11.98 billion in 2018, up from $3.577 billion in 2000.

The company's net income has also shown a positive trend, with a high of $2.599 billion in 2018. However, there was a notable dip in 2009, when the company reported a net loss of $1.881 billion.

State Street's assets have grown significantly over the years, reaching $244.6 billion in 2018. This growth is reflected in the company's assets under management, which increased from $420 billion in 2000 to $2.511 billion in 2018.

Here's a breakdown of State Street's financial performance over the years:

As you can see, State Street's financial performance has been steadily improving over the years, with significant growth in revenue, net income, and assets. The company's assets under management have also increased significantly, demonstrating its strong position in the industry.

Executive Compensation is a critical aspect of a company's financials. It refers to the payment and benefits provided to the top executives, such as the CEO and CFO.

The total compensation for executives can be broken down into several components, including salary, bonus, stock options, and other benefits. The average CEO in the US earns around $20 million per year.

Executive compensation can be tied to company performance, with bonuses and stock options granted based on meeting certain financial targets. This can create a strong incentive for executives to drive growth and profitability.

In 2020, the median total compensation for CEOs at S&P 500 companies was $12.3 million. This number has been steadily increasing over the past decade.

The Board of Directors plays a crucial role in determining executive compensation, as they are responsible for setting pay and benefits. They must balance the need to attract and retain top talent with the need to manage costs and maintain shareholder value.

The SEC requires companies to disclose executive compensation in their proxy statements, providing transparency and accountability. This information is publicly available and can be used by investors to make informed decisions.

Climate coalitions and climate risk are closely linked, as seen in the example of the 2019 report by the Task Force on Climate-related Financial Disclosures (TCFD), which noted that nearly 70% of companies surveyed reported that climate-related risks were material to their business.

The TCFD also found that companies with well-developed climate strategies were more likely to have lower greenhouse gas emissions and better financial performance.

Climate coalitions can help companies manage climate risk by providing a framework for collaboration and knowledge-sharing.

Companies like Unilever and IKEA have been successful in reducing their greenhouse gas emissions through supply chain engagement and partnerships with other companies.

In fact, Unilever's sustainable living plan has helped the company reduce its greenhouse gas emissions by 50% since 2010.

The TCFD report also highlighted the importance of scenario planning in managing climate risk, with companies like Shell and BP using scenario planning to inform their business strategies.

By working together, companies can better understand and manage climate risk, and ultimately create a more sustainable future for all.

State Street Global Advisors has made a commitment to diversity and inclusion through its "Opportunity Class" investment tool, launched in November 2021, which allows clients to support "inclusion and diversity" initiatives.

The firm has been an active voice in the investment management community, integrating racial equity and social justice issues into its activities. It sent a letter to corporate board chairs in 2020 to ask companies in its portfolio about their racial and ethnic diversity strategy.

Racial sensitivity trainings were implemented for staff in 2020 as part of the firm's action plan. This plan also included a commitment to donate 20 percent of its net management fees annually to left-leaning advocacy and charitable organizations.

The firm donated $5 million to launch the New Commonwealth Racial Equity and Social Justice Fund. State Street Global Advisors also operates the State Street Foundation, which funds left-leaning advocacy groups.

State Street Global Advisors (SSGA) has been relatively consistent in its support for Environmental and Social (E&S) shareholder proposals over time. They tend to support proposals that focus on disclosure and oversight of E&S issues, but not those that are too prescriptive on business strategy or capital allocation.

SSGA sees more proposals around Human Capital Management (HCM), social issues, and the governance of environmental and social issues. These proposals are evolving quickly, with a shift from primarily focusing on disclosure to oversight of topics like climate lobbying.

Companies may agree or disagree with SSGA's expectations, but they appreciate the consistency in their approach and voting philosophy. SSGA has published their expectations and framework for evaluating certain proposal types, such as political participation, pay gap, and racial equity audit proposals.

SSGA's approach to shareholder proposals is transparent, providing directors with clarity and predictability into their voting decisions. This is especially important as the number of proposals is expected to increase, with some being well-crafted and others not warranting support.