In just 16 months, State Street Global Advisors’ US Offshore business has tripled its assets, and the firm is now exploring the Brazilian market. In the longer term, the company is also eyeing other Latin American markets, said Heinz Volquarts, Managing Director and Head of Americas International (Canada, LatAm & Offshore) at State Street Global Advisors, in an exclusive interview with Funds Society.
Volquarts, who is based in New York, also highlighted the growing interest in industrial and defensive sectors due to market volatility and uncertainty, and noted the current flow into European equities.
He also said that the ETF-focused asset manager has no plans to expand its distribution agreements in Latin America, although it believes in strategic partnerships like those it already maintains with Blackstone, Apollo, Nuveen, DoubleLine, and Bridgewater for actively managed ETFs. He predicted the ETF industry is well positioned for continued growth, pointing to the low cost of ETFs as a key differentiator in the sector.
Market Decline and Rotation
Tariff-related uncertainty has triggered volatility in global equities and a rotation into other asset classes and markets. In the interview, Volquarts explained that although State Street offers a broad range of equity products, the firm has also grown its fixed income offerings in recent years.
“In recent weeks, we’ve seen increased demand from clients for investment ideas and sector positioning. Clients are looking to position themselves in more defensive sectors—those less damaged or impacted by tariffs. Ultimately, this has created an opportunity to be more defensive,” he said.
Volquarts also pointed out another clear shift: rising demand for ex-U.S. products. “Europe is the area where we’ve seen the most interest, with flows into European equity products. Latin American clients are also beginning to look at European and industrial sectors,” he added.
State Street’s Numbers in Latin America
Regarding regional ETF demand, most comes from institutional clients, mainly Afores and AFPs, which account for 75% of the demand, explained Volquarts, who graduated from Mexico’s Instituto Politécnico Nacional (IPN) and holds postgraduate degrees from Universidad Anáhuac.
In Mexico, the business with Afores continues to grow at an annual rate of 10% to 15%, while in Colombia it’s growing at 10%, with State Street gaining market share. In Chile and Peru, growth has been organic, primarily through AFPs.
However, Volquarts emphasized that in Peru, the Wealth Management business has been the main growth driver, fueled by demand from family offices. “Peru has been a positive surprise for us in the wealth segment. While AFPs have seen some withdrawals in recent years, private banking has grown significantly,” he said.
The State Street executive described “a train that other countries are now boarding” as they begin to open offshore accounts. He specifically referenced Brazil: “We’re seeing money coming into Miami from Brazil, which is a relatively new trend.”
The firm already has assets in Brazil, where State Street Global Markets has a strong presence. However, the company plans to proactively cover the Brazilian market. “Institutional demand locally in Brazil isn’t very strong yet, but we’re exploring it,” he told Funds Society.
In Mexico, “RIAs have grown significantly, with positions in both domestic and offshore accounts. Most of the flows have moved to the U.S. offshore market,” he explained.
“We currently have proactive Offshore Wealth coverage, led by Diana Donk in the US Offshore Market, and Argentina and Uruguay are on our radar for the coming years,” he added.
Leaders in Low-Cost Products
In the interview, Heinz Volquarts emphasized: “We want to be competitive and offer our clients access to our portfolios at competitive prices. We are one of the market leaders in low-cost products, but we offer many other options; we’re competitive in sectors and also have active products.”
State Street Global Advisors has reached agreements with other asset managers for specialized strategies, such as the SPDR Blackstone Senior Loan ETF, which has more than $6 billion in AUM and has been running since 2013, and the recently launched SPDR Bridgewater All Weather ETF—“a multi-asset strategy that’s perfect for a volatile environment like the current one,” noted Volquarts. These are actively managed ETFs, currently available only in 40Act format.
Speaking specifically about the US Offshore business, he said that the firm has been actively working in this area for the past 16 months and has tripled its assets during that time. He also said that State Street continues to work with major wirehouses (UBS, Morgan Stanley, Merrill Lynch, among others), with the private banking segment using UCITS strategies, which have been well received by RIAs.
Volquarts also identified three clear market trends: currency-hedged strategies, low-cost products, and model portfolios using ETFs. In terms of distribution, LatAm is covered through Credicorp (Andean region), and in Mexico they have a sales director, Ian López.
The executive sees no signs of slowdown in the ETF industry, which has been growing rapidly in recent years. “The sector is expected to continue growing at a fast pace,” he said, citing a compelling figure: “There’s still a lot of money in mutual funds. In Canada, out of the $3 trillion invested in mutual funds, only 18% is in ETFs.”
