The November issue of Crane Data's Money Fund Intelligence newsletter featured the article, "State Street's Fortuna on Fund Connect Portal." MFI interviewed Greg Fortuna, Managing Director at State Street Global Markets, and Peter McHugh, Vice President for the company's online money market fund trading "portal", Fund Connect, in Europe. Fund Connect announced the rollout of its Transparency Connect analytics module at earlier this month at the Association for Financial Professionals' (AFP) annual conference in Boston. Excerpts from our Q&A follow.
MFI: How long has State Street been in the money fund "portal" business? Fortuna: We were one of the first ones in the space and launched over 10 years ago. The original product was Global Link and was launched to distribute a series of funds that provided exposure to various European currencies. In 2001, we finalized a major overhaul that resulted in today's version of Fund Connect, which focuses on short-term funds in the U.S., Canada, Europe and Asia.
MFI: How much money does the company currently distribute? Fortuna: State Street has a significant presence in the 2a-7 marketplace. From a portal perspective, we've grown over the last two years, even in a challenging market environment.... We've seen growth, both domestically and also from an offshore perspective. Assets are approximately 65% domestic and 35% offshore. We are also seeing some risk aversion in our investor base, so we still see flows going into government and treasury funds. That is a growing sector right now, given the European debt crisis, and ongoing market volatility overall.
MFI: How many funds and families are on the platform? Fortuna: We have a diverse client base, but unfortunately we can't disclose the number of funds on the platform. We support fully disclosed direct trading, and we support omnibus trading, both omnibus through the custodian and also through a broker dealer account only. We also will support FBO [for the benefit of] trading. Pretty much any style of trading that our clients do, we support, and we do it in a way that provides the ability to use multiple styles with the same login information. McHugh: In addition, a lot of our clients, especially in Europe, have direct relationships with smaller fund companies, and we are more than willing to bring those companies on for those specific clients.
MFI: Do you offer investments besides money market funds? Fortuna: Fund Connect is part of State Street E-Exchange's suite of electronic trading products. We have always had products that worked together -- FX Connect, Money Market Connect to trade time deposits, Futures Connect, Fund Connect, etc. McHugh: As an example of our full-service approach, investors can redeem from a GBP money market fund, select an FX bank partner from over 70 banks from Currenex or FX Connect and through custom integration can receive the proceeds from their redemption in USD with the click of a mouse.
MFI: Tell us about the new features. What have you added? Fortuna: The newest addition to the Fund Connect platform is our Transparency Connect offering. With the ongoing volatility in global markets, whether it's the European debt crisis or individual exposure concerns, we now have what we feel is a comprehensive and intuitive solution for our clients. We cover funds in multiple currencies and our Transparency Connect is fully integrated with Fund Connect, so all exposures are shown pro-rata. Clients can click on any of the pie charts that in the system and see their individual exposure to any underlying holdings. The key to our new Transparency product is that everything is interactive. You can click on any slice of any chart in our program and drill down to the underlying holdings within it.
Among some of the other big changes we've done lately, we are integrated with pre-trade compliance and are always adding new features and functionalities, [such as] multiple levels of approvals that are asset based and proactive.... We have also built a portfolio function that allows users, in one easy to use view, to track their current holdings, their current accruals, and all the information on the fund's investments they have across the accounts and divisions they have set up within Fund Connect. Graphically, they can see their real time exposures to fund providers, funds, fund categories, regions, currencies, etc., so it provides a macro level of transparency.
Look for the second half of our money fund portal "profile" in coming days, or e-mail Pete to request the full article in the latest issue of Money Fund Intelligence.
