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State Street eyes mutual funds as Wall Street turns to ETFs

Name: State Street eyes mutual funds as Wall Street turns to ETFs
Uploaded: 2025-11-05T21:41:34Z
Description: Anna Paglia, State Street chief business officer, joins CNBC's Dominic Chu on 'ETF Edge' to discuss why State Street is turning to mutual funds as the rest of the street turns to create ETF assets. VettaFi head of research Todd Rosenbluth joins the conversation.

11/5/2025, 9:41:34 PM

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Economic Summary

About $4 trillion of retirement assets are invested in index strategies but face wrapper fragmentation because many retirement plans (e.g., 401k/403b) cannot buy ETFs, creating structural demand for mutual-fund variants of ETF exposures.
State Street (STT) is pursuing mutual fund share classes of its ETFs to bring ETF content, scale, and lower costs to retirement products, leveraging its $1.7 trillion ETF business.
If the SEC permits multi-share-class structures for the same vehicle and timing aligns with government actions, asset managers could offer identical exposures across ETF and mutual fund wrappers, reducing inefficiency.
Adoption is expected to be watched through 2026, with some firms already filing to offer retirement-focused strategies, indicating potential industry-wide product shifts.

Bullish

State Street can leverage its $1.7 trillion in ETF assets to offer low-cost mutual fund share classes.
Creating mutual-fund share classes of ETFs could unlock ~ $4 trillion in retirement index demand.
Other asset managers may follow, expanding product availability for retirement plans.
Mutual fund wrappers remove tax frictions for retirement accounts, matching ETF strategies to plan constraints.

Bearish

Regulatory and wrapper fragmentation limits ETF access for retirement plans, slowing adoption.
SEC approval and government timing uncertainty could delay product launches.
Investors may not prefer mutual funds over ETFs when both are available side-by-side.
Competition and execution risk for ETF firms entering the mutual fund retirement market.

Bullish tickers

STTFM INVESTMENTS

Bearish tickers

STTFM INVESTMENTS

STT

Bullish

Can leverage $1.7T in ETF assets and scale to offer low-cost mutual-fund share classes that address $4T retirement demand.

Bearish

Regulatory delays, execution risk entering mutual fund retirement market, and continued wrapper fragmentation may erode near-term gains.

FM INVESTMENTS

Bullish

Has filed to offer strategies in retirement plans, positioning to capture demand for ETF-like mutual fund products.

Bearish

Unclear adoption and competitive pressures; filing intent may not translate to broad market success.

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