State Street Corporation of Boston will acquire the portfolio accounting service business of DST System of Kansas City, Mo., the companies announced last week.

The acquisition gives State Street an additional type of fund accounting service that it can offer to its clients, according to Alyson Riley, a spokesperson for State Street. DST's fund accounting business uses Portfolio Accounting System, which automates fund accounting and record keeping, according to State Street.

State Street currently offers only full service fund accounting whereby companies can outsource all of their accounting functions to State Street fund accountants, according to Riley. With the Portfolio Accounting System, clients can use their own accountants to plug in' their numbers into the system, which will reside with State Street. That will give clients flexibility regarding what proportion of their accounting services they outsource and how much they keep in-house, said Riley.

"This business is independent of DST's mutual fund transfer agency business and has no impact on DST's core business of mutual fund shareholder accounting," said Tom McCullough, executive vice president and chief operating officer of DST, in a statement.

DST will provide data processing support for the system and State Street will hire about 85 employees from DST's portfolio accounting business, according to the companies. The transaction has been approved by the boards of both companies and is expected to close next month, the companies said. The terms of the deal were not disclosed.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.