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State Street 2014 Asset Manager Survey

On behalf of State Street, FT Remark conducted a global survey of 300 senior executives at asset management firms globally during April and May 2014, to examine the future outlook for the sector. Respondents were equally distributed across North America, Europe and Asia Pacific.

About the Research

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44%

17%

19%

12%

7% 2%US$5-$24bn

US$25-$49bn

US$50-$99bn

US$100-$200bn

US$200-$499bn

US$500bn or greater

Source: State Street 2014 Asset Manager Survey, conducted by FT Remark

78%

17%

5%

Both retail and institutional

Institutional only

Retail only

Respondents by Size (Assets under Management)

Respondents by Type of Assets Managed

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48%

24%

Expected Sources of Growth: Business Strategy

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28%

72%

New Country Markets

Developing new products for existing markets

Growing market share of existing products in existing markets

20%

8%

Existing Country Markets

Bringing existing products to new markets

Developing new products for new markets

Which of these is the greatest growth opportunity for your business over the next three years?

Source: State Street 2014 Asset Manager Survey, conducted by FT Remark

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Few asset managers are currently equipped to thrive when offering multi-asset solutions

Challenges to Growth: Asset Managers Acknowledge a Capability Gap

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67% 74%

Multi-asset solutions are the investment strategy that will contribute most to business growth over the next three years

Source: State Street 2014 Asset Manager Survey, conducted by FT Remark

76% say that changing client demands are causing a fundamental shift in their overall business strategy

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Challenges to Growth: Building Internal Expertise

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Building the necessary internal expertise

Selecting the right distribution platform(s)

Determining the optimal fund structure/domicile

Creating the necessary operational and technology infrastructure

Overcoming regulatory barriers

Gaining internal consensus on strategy

-20% 0% 20% 40% 60%

21%

21%

19%

13%

18%

8%

20%

15%

10%

13%

40%

2%

Single biggest challenge when entering new marketsSingle biggest challenge when launching new products in existing markets

What is the single biggest challenge for your firm when launching new products in your existing markets or expanding to new markets?

Source: State Street 2014 Asset Manager Survey, conducted by FT Remark

55% report that distribution challenges deter them from investing in otherwise highly attractive markets

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Capitalizing on New Opportunities: Number of Distribution Channels

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Please indicate which of the following will be likely for your business over the next three years.

49%

32%

19%

There will be no change

Will increase number of distribution channels

Will decrease number of distribution channels

Source: State Street 2014 Asset Manager Survey, conducted by FT Remark

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Capitalizing on New Opportunities: Investment in Front Office Capabilities

Risk analytics

Performance analytics

Data integration

Acquiring new talent to resource higher volume of business

Skills training

Acquiring new talent to address capability gaps

0% 20% 40% 60% 80% 100%

7%

4%

3%

13%

6%

20%

11%

11%

11%

28%

29%

26%

33%

39%

50%

28%

37%

36%

48%

46%

36%

31%

27%

17%

None Minimal Moderate Significant

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What level of investment in your front office capabilities is required to support your business over the next three years?

Source: State Street 2014 Asset Manager Survey, conducted by FT Remark

91% believe that asset managers who provide the greatest degree of transparency to clients have a competitive advantage in attracting new assets

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The Bottom Line • Asset managers must prioritize those shortcomings that hinder immediate growth prospects

• The most innovative asset managers are already adjusting to new customer demands, transforming single asset products into fully-serviced solutions

• Leaders are investing heavily in the tools and capabilities required to thrive in this more specialised and testing environment

Conclusion: How Asset Managers Can Secure Competitive Advantage

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Transformation • Enhance operational efficiency and focus on enterprise-wide agility

• Master regulatory compliance so that regulation is no longer an obstacle to growth

Tools • Upgrade the front office to support new growth segments and more complex multi-asset solutions

• Deploy advanced tools to deliver a more outcome-based perspective on investment risk and performance

Talent • Identify where the new solution set require different skills; augment your capabilities with the right blend of in-house and external support

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Disclaimer

This document is for marketing and/or informational purposes only, it does not take into account any investor's particular investment objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a clients own careful independent review regarding any corresponding investment decision or review of our products and services prior to making any decision regarding their utilization.

This does not constitute investment, legal, or tax advice and is not a solicitation to for products or services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document and/or the information herein.

This document contains certain statements that may be deemed forward-looking statements, which are based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected future developments and other factors believed appropriate in the circumstances.

CORP-1031E

Expiration Date: 06/30/2015

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