State Street Global Advisors, which is in the midst of bulking up its international fund business, has expanded its relationship with Bank of Ireland.
Under a new partnership, the State Street Corp. unit will provide investment advice and portfolio management in Ireland. The services will be marketed to institutional investors by Bank of Ireland Asset Management.
"They have certain strength that we are able to capitalize on, and we have strength that they are able to capitalize on," said Timothy Harbert, president of State Street Global Advisors.
State Street first joined forces with the Dublin bank in 1997 to provide custody and accounting services for Bank of Ireland funds. The Boston company has $8 billion under management in that arrangement.
Mr. Harbert said the next step for his company will be to align with a third-party distributor to continue selling additional investment products through intermediaries in other European countries.
"What we have here is just typical growth," he said. "It started with one investment center and our products are helping us grow" in Europe.
With the addition of Ireland, State Street Global Advisors, which manages $729 billion in investment programs and portfolios, has offices in 19 countries including Taiwan, Japan, Canada, Germany, Australia, and the United Kingdom.
It is also preparing to expand its exchange-traded funds into Germany, Australia, and Canada. Klaus Esswein, head of the German unit, said State Street plans to introduce nine of its exchange-traded funds on the Frankfurt stock market.
The products will track sectors in the Standard & Poor's 500 including utilities, technology, finance, energy, consumer goods, cyclicals, and transportation.
State Street manages 53% of the $58 billion exchange-traded fund market worldwide. The State Street S&P 500-tracked Spider fund has attracted $22 billion, and the Select Spider funds, which track various sector indexes, manage $3 billion of assets.
Analysts say this aggressive pursuit of foreign markets is a result of a domestic market saturated with investment products and an untapped global community that is slowly becoming less fettered by regulations.
"American firms are seeing all of their competitors heading overseas, and they need to do what they can to get a toehold over there," said Peter Jankovskis, director of research at Oakbrook Investing of Lisle, Ill.
For State Street, which entered Europe in 1990 when it started a subsidiary in Luxembourg, much of that competition continues to come from Barclays Global Investors and Merrill Lynch.
Merrill rolled out its first European exchange-traded fund in June in Frankfurt, with Barclays following suit a week later in London. The companies estimate that the European exchange-traded fund market will grow to $40 billion within five years. That is about the amount of exchange-traded fund assets in the United States.
Mr. Esswein said State Street's German products will be the first to trade on Frankfurt's exchange-traded fund domain. Currently, the exchange only offers funds tied to the Dow Jones Euro Stoxx 50 and Dow Jones Stoxx 50 indexes.
State Street Corp. has spent the past 18 months building up its business in the Asian markets: In April 1999 the bank teamed with Nomura Securities and the Industrial Bank of Japan to provide record-keeping services to Japan's $12 trillion 401(k) market; in August 1999 it introduced index funds for the retail markets in Asia, including South Korea, Hong Kong, Singapore, and Taiwan; and in May of this year it struck an alliance with Korea's largest investment consulting firm, Korea Development Investment Management Co., to start a company named Hansset Global Management to sell funds in Korea.
A month later State Street aligned Industrial and Commercial Bank of China to serve as the bank's external asset manager. It also agreed to advise the bank's first open-end mutual fund.
"It is a matter of making your mark in as many markets as possible," Mr. Jankovskis said. "Banks are looking to do unique things, and that means investment products and ETFs globally."