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Money Management

State Street Global Advisors’ AUM gains for quarter, year

State Street Corp. headquarters in Boston

State Street Global Advisors had $2.81 trillion in assets under management as of March 31, up 11.7% from three months earlier and 2.8% higher than a year earlier, parent State Street Corp. (STT)'s earnings release Tuesday showed.

SSGA experienced strong net inflows in the latest quarter compared to the previous three months. Net inflows were $73 billion in the quarter ended March 31 vs. net outflows of $47 billion in the previous quarter and net outflows of $26 billion in the first quarter of 2018.

Despite the reversal in inflows, Ronald P. O'Hanley, State Street's president and CEO, told analysts during an earnings call that "investment inflows are way below recent trends," noting that "investor confidence remains low relative to trend." Mr. O'Hanley attributed investor nervousness to issues including Brexit, the prospect of higher interest rates and general market uncertainty.

By asset class, equities attracted $47 billion in inflows, compared to outflows of $11 billion and $55 billion, respectively, in the fourth and first quarters in 2018.

Cash had inflows of $24 billion in the three months ended March 31 compared to outflows of $30 billion in the prior quarter and inflows of $7 billion in the quarter ended March 31, 2018.

Multiasset strategies attracted inflows of $5 billion in the first quarter vs. outflows of $2 billion in the prior quarter and inflows of $1 billion in the previous-year quarter. Alternatives continued to attract inflows, with $2 billion in the current quarter and $1 billion in each of the quarters ended Dec. 31 and March 31, 2018.

Fixed-income strategies experienced a second consecutive quarter of outflows of $5 billion in each of the quarters ended March 31 and Dec. 31, compared to inflows of $20 billion in first quarter 2018.

Total first quarter inflows were driven by passive flows from institutional investors and a more general move into cash by a variety of investors, said Eric Aboaf, State Street Corp. (STT)'s chief financial officer, during the earnings call.

State Street reported that passively managed equity strategies totaled $1.7 trillion as of March 31, up 7.6% from the previous quarter and up 15.8% from the same date a year earlier. By contrast, actively managed equity strategies totaled $85 billion.

State Street's earnings report did not break out the proportion of indexed or active assets managed for institutional investors.

SSGA's long-term institutional strategies — except for fixed income — experienced inflows totaling $52 billion in the three months ended March 31, including: equity, $53 billion; multiasset, $5 billion; alternatives, $2 billion; and cash, $1 billion.

Long-term institutional fixed-income strategies had outflows of $9 billion, State Street's earnings report showed.

Equities managed by SSGA were $1.78 trillion as of March 31, up 15.3% from Dec. 31 and up 6.6% from March 31, 2018.

Fixed income accounted for $429 billion, up 1.7% from three months earlier but down 0.9% from a year earlier.

In SSGA's other asset classes, multiasset strategies totaled $147 billion at the end of the latest quarter, up 11.4% from the end of the previous quarter and up 0.7% from the first quarter 2018; alternative investments, at $134 billion, were up 6.3% from three months earlier and down 6.9% from 12 months earlier; and cash, at $314 billion, was up 9.4% and down 6.5%, respectively.

Assets under custody and administration were $32.643 trillion, up 3.2%% from Dec. 31 and down 1.9% from March 31, 2018.

SSGA's investment management fees totaled $420 million in the first quarter, down 4.5% from the previous quarter and down 11% from the year-earlier quarter.

In response to questions from analysts, Mr. Aboaf said given the firm's high level of low-fee passive assets under management, the bank's asset management unit needs to further develop and expand its suite of higher-fee investment strategies including liability-driven investing, OCIO and fixed-income.

State Street Corp. reported total revenue of $2.932 billion for the quarter, down 3% from the fourth quarter and down 4.1% from the first quarter of 2018. The corporation's net income was $508 million, up 16.2% from the previous quarter, but down 22.9% from the year-earlier quarter.

State Street restated its total revenue and net income figures for the fourth and first quarters of 2018.