Naomi Yamamoto: I'm Naomi Yamamoto, Global Program Manager at State Street. Today we have Deirdre Ryan, Business Origination and Fatiha Charti, the Head of Relationship Management and Client Service at State Street Luxembourg. Welcome, Deirdre and Fatiha.
Deirdre Ryan: Thank you.
Naomi Yamamoto: Deirdre, I'll start with you. Can you give us the high-level overview of the trends that we're seeing in Luxembourg, in Europe? And then also if you can kind of talk about the meaningful shifts that you're seeing in terms of fund structure, distribution and asset allocation strategies.
Deirdre Ryan: Sure. Thanks, Naomi. And as a general comment, I would say that the global trends that we see play out in our cross-border locations. So in Luxembourg and in Ireland, and this really underpins the importance that these locations have for our clients in executing and succeeding at their distribution strategies. So there's two in particular that I would call out. The first one is the private market space and the increasing importance that there is on private markets, and the use of alternative funds as a wrapper to attract mass affluent investors in particular, and using hybrid funds as a way of having your private market capital allocation, but a more retail-like distribution. So connecting those two worlds together.
Luxembourg has a really robust toolkit available to managers to achieve those goals and those structures, and the ELTIF of 2.0 in particular, we see an increase in from our clients. The other trend is the active ETF. So again it's a global trend that we are seeing in terms of increased assets under management and number of funds. And we see that play out here in Luxembourg with investors certainly, or managers looking to launch either active ETF mutual funds on their own or an active ETF share class within an existing fund structure. So this has been available to Luxembourg and Ireland for a long time. But really we're seeing that uptake right now of managers looking to get that exposure into ETFs. But at the same time not having to undergo the expense of a new fund launch and also maintaining their performance track record. So two important trends that we are seeing and that Luxembourg and State Street is well equipped to service today.
Naomi Yamamoto: Thank you Deirdre. Very exciting time to be in Luxembourg. Question for you, Fatiha. Transfer agency is a core service that State Street has to offer and the key, it's also a key differentiator when it compares to the global custodians with the recent announcement of the insourcing of this service within State Street. What does this mean to our clients?
Fatiha Charti: Absolutely, Naomi. So transfer agency is key for clients and the services we offer play a huge role. Investors are our clients’ most precious assets. And so, it's very important for clients to have the right transfer agents because it helps them boost their own distribution. So in that context, what we've observed recently, we've observed a few trends in terms of what clients want to see with their transfer agents. The first one being simplification. Our clients are global asset managers who have business across the globe. So those clients want to see consistent look and feel in terms of the services and reporting we offer. They want to see that consistency across countries, regions and across products.
The second trend is digital-first. Similar to the revolution we're seeing in the retail banking. Our clients also want their investors to be able to access their investments through a phone app. The third trend we're seeing is automation and connectivity. Clients, especially the ones I talked about, the global asset managers want to have perfect connectivity to global distribution platforms, but they also want to have help desk that follow the sun to make sure that they're servicing investors all over the globe.
And then maybe the other in the last trend I'll talk about is a single platform. Clients want to have the same transfer agents for the liquid funds and illiquid funds that Deirdre mentioned earlier. So in that context, it was very important for State Street to insource the transfer agency activities because it helps us achieve three objectives. The first one is to make sure that we have a full end to end oversight over our services. That helps us simplify the operating model, speed up decision making, and ultimately give our clients or their investors a great experience. The second one is, it helps us implement our innovation agenda. And then the third trend, or the third objective is to make sure that we have an efficient operating model.
Naomi Yamamoto: Deirdre. We recently announced the planned acquisition of Mizuho's Global Custody and its related businesses outside of Japan. Can you talk about the benefits for clients for this acquisition?
Deirdre Ryan: The planned acquisition, that's obviously very exciting news for State Street. And specifically here in Luxembourg, it means that what we would acquire is the Mizuho Trust and Bank Luxembourg entity. And that entity today provides global custody to its Japanese clients and also asset servicing for Luxembourg and also Cayman domiciled funds. So the planned acquisition for us here will help reinforce our already market-leading position in Luxembourg, and is consolidating us as the asset servicer of choice in Japan, and where actually we are the only international bank today who has a trustee license. So very exciting news. In Luxembourg, I think one of the really key elements for us is the people that we will acquire, the talent that they have in servicing a very sophisticated client base today. So that talent moving to us here in Luxembourg, as well as our ability to service complex instruments, our scale and our technology is going to be a great solution for all of our clients.
Naomi Yamamoto: Fatiha, given the trends that we discussed today, what does State Street have to offer?
Fatiha Charti: Absolutely, Naomi. So I think we talked about three trends transfer agency distribution, which I already covered. And then the other two trends which Deirdre mentioned are active ETFs and retailization of private markets. So in the ETF space we are both an asset manager where we're in the top four and an asset servicer. So at State Street Luxembourg we focus on the asset servicing where we are a market leader. In the trends the private markets it's growing heavily. A lot of our clients, both new clients and existing clients, are launching products in the private market space and more recently also leveraging, what Deirdre talked about earlier, retailization. So a lot of our clients want to offer wealth management, you know, clients in the wealth management space, access to private markets. So that's also driving that trend. And we actually also helped a client recently launch, an ELTIF 2 which is the fund wrapper that clients utilize in Europe and in Luxembourg specifically. So again, there it's the technology. It's the scale. It's the size that we're building for our clients to also, you know, leverage the same benefits we offer them in the traditional space. So as you see Naomi at State Street, we are not just keeping up with industry transformation. We're actually architecting the future of investment across all of the trends that we're talking about. So thank you for that question.
Naomi Yamamoto: Thank you Fatiha. It's a great pleasure having you guys here. Thank you so much for your time and your expertise is much appreciated.
Fatiha Charti: Thanks. Thank you.
