State Street (NYSE:STT) is the world's third largest
institutional investor and the world's second-biggest exchange
traded funds (
) provider after BlackRock (
). But that is predominantly due to its strong position in the U.S.
ETF market. While State Street, through its SPDR brand of ETFs, had
over $210 billion (as of April 2011) worth of assets under
management globally, it was dwarfed in the European ETF markets
with only $1.2 billion worth of assets under management compared to
BlackRock's $115.3 billion.
In a recent move to strengthen its presence in the European ETF
market, State Street has added 8 new ETFs to its existing 13 in
Europe, with more launches scheduled later this year. We value
State Street with a
$47.78 stock price estimate
, in line with its current market price.
We've also previously discussed what makes the European ETF
markets crucial for global asset managers in an article titled '
Vanguard Challenges BlackRock's ETF Dominance With
Not Much Upside to State Street Stock
We estimate that ETFs make up less than 2.5% of State Street's
stock value. State Street stands in the 20
position with a 0.3% share of the European ETF market.
And how sensitive is State Street's stock to growth in ETF
assets under management?
We currently estimate that State Street's ETF assets under
management will grow at an annual rate of over 13%, breaching the
$620 billion mark by the end of our forecast period. Even a 1%
increase in this annual rate, coming from greater presence in
Europe, would only spur 0.2% potential upside to our price estimate
for State Street's stock.
Since State Street still has a small presence in the European
ETF market, investors should take note of how well the recently
launched ETFs are able to gain traction and scale up trading
volumes in the near term.
View our detailed analysis for State Street stock