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Did Columbia Threadneedle’s New ETF Servicing Mandate Just Shift State Street's (STT) Investment Narrative?

Simply Wall St · 01/08 22:30
  • State Street Corporation recently announced it has been appointed as the service provider for Columbia Threadneedle Investments’ newly launched UCITS actively managed ETFs, initially covering US and European equities with Emerging Markets and Global products expected to follow.
  • This mandate underlines State Street’s breadth in end-to-end ETF servicing across custody, fund accounting, basket creation, order management and reporting for global asset managers.
  • Next, we’ll examine how this new Columbia Threadneedle ETF servicing win could influence State Street’s investment narrative and future fee outlook.

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State Street Investment Narrative Recap

To own State Street, you need to believe in the durability of its role in global custody and ETF infrastructure, even as fee growth has been modest and competition intensifies. The Columbia Threadneedle UCITS ETF servicing win reinforces State Street’s relevance in ETF administration, but the incremental fee impact versus its large existing base appears limited in the near term. Short term, the key watchpoint remains servicing fee momentum versus ongoing fee compression across ETFs and passive products.

The Columbia Threadneedle mandate sits alongside another recent UCITS ETF servicing appointment from Dimensional Fund Advisors, which points to a pattern of State Street deepening its role with active ETF issuers. Together, these wins align with the broader ETF asset growth highlighted by record global ETF inflows and speak to a core catalyst for State Street: defending and extending its scale position in ETF servicing while fee pressure remains a structural risk.

Yet even as new ETF mandates arrive, investors should be aware of the growing pressure from fee compression and how it could...

Read the full narrative on State Street (it's free!)

State Street's narrative projects $14.7 billion revenue and $3.5 billion earnings by 2028. This requires 3.3% yearly revenue growth and about a $0.9 billion earnings increase from $2.6 billion today.

Uncover how State Street's forecasts yield a $130.14 fair value, in line with its current price.

Exploring Other Perspectives

STT 1-Year Stock Price Chart
STT 1-Year Stock Price Chart

Four members of the Simply Wall St Community currently see fair value for State Street between US$75 and about US$156, reflecting very different expectations about its upside. You can weigh those views against the risk that ongoing fee compression in ETFs and passive assets may affect State Street’s ability to translate additional mandates into stronger long term earnings, and consider how that might influence the company’s performance.

Explore 4 other fair value estimates on State Street - why the stock might be worth 44% less than the current price!

Build Your Own State Street Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.