Will State Street Corporation be able to survive the financial crisis?
I’m Japanese thinking of investing in an Exchange Traded Fund named SPDR S&P/ASX 200 which is managed by State Street Global Advisors, Australia, an Australian subsidiary of State Street Corporation headquartered in Boston.
The ETF is attractive for me because ASX 200 is low and I have some Australian dollars, however, American financial institutions are in turmoil due to the current financial crisis. So I’m concerned that I may get in trouble if State Street Corporation collapsed.
Let me know your opinion about the probability of State Street Corporation surviving the financial crisis. Or, assuming that I mada an investment, is it likely that my money is secured even if State Street Corporation collapsed?
Unless there is fraud involved, index ETFs should be very safe no matter who issues the ETF since they are backed by the underlying securities and held in a unit trust. Even if the issuing company files for bankruptcy, the unit trust usually cannot be discharged to pay for the debts of the company.
http://northcoastinvestmentresearch.wordpress.com/2008/09/19/hidden-credit-risks-of-etfs/
http://seekingalpha.com/article/48402-are-etfs-safe-or-insured
I do not believe that State Street is in financial danger but with banks it is difficult to say. There is really no way of knowing what quality the assets on their books are until it is too late. Banks really do not like to advertise their poor loans until they go into default.
State Street made a net profit in 2008 and increased it’s dividend.
You can go to this google link and scroll down to see State Street’s financials: http://www.google.com/finance?q=NYSE%3ASTT
The ETF stands for Exchange traded fund with that in mind, it is my belief that we are at unprecedented times. While things are very volatile now…. I believe equities are becoming extremely undervalued. I think this will prove to be the greatest buying opportunity in 50 years. America will recover and the rest of the world will recover and Australia will recover.. Lastly, state street is still one of the largest asset managers in the world… And out of all the financials is still one of the best and well capitalized…
Happy Trading,
Wall Street Wife