State Street Corp. of Boston plans to buy International Fund Services, a Dublin alternative investment and hedge fund manager and custodian. The purchase, State Street's second in the hedge fund business and its first in global custody, rounds out the services State Street needs to enter the hedge fund management and custody business, according to the firm.

International Fund Services runs 350 hedge funds and supplies alternative investment services to more than 100 international asset management firms and private equity fund managers.

Terms of the deal, which is expected to close in the third quarter, were not disclosed.

Ronald Logue, president and chief operating officer of State Street Corp., said that buying International Fund Services will give State Street mutual fund clients access to International Fund Services products, of which State Street will act as custodian.

At an investors conference in May, Logue said that it was clear that financial services companies want to offer their customers access to hedge fund and alternative investments.

"Our customers want us to service not just regular retail mutual funds," he said. "They want a full breadth of products and services. They want a full fleet of products."

State Street built its reputation as a custodian by offering mutual funds, Logue said. But in order to serve affluent and institutional customers, it is crucial to offer a complete suite of products.

"This is just part of the services that wealthy individuals are looking for," he said. "Hedge funds and alternative investments, coupled with high-net-worth service and managed account wraps, make us a full-service player."

In June, State Street bought the New York wealth manager J&W Seligman & Co. in order to add separately managed accounts to its product menu.

In June 2001, State Street Global Advisors bought the assets of RXR Group Inc., a quantitative asset management company with $335 million of assets under management in proprietary programs. This enabled it to start SSARIS Advisors, an alternative-investment advisory unit that sells products to State Street clients.

Burton Greenwald, a Philadelphia mutual fund consultant, said State Street may not be the first to enter the hedge fund arena, but it stands to have the most complete package because of the breadth of products and services it can now offer through its acquisition of Seligman and International Fund Services.

Greenwald said the company's lone remaining hurdle is integration. "Offering more is excellent. But financial services firms have to find a way to bring these to their customers without making them just an addendum," he said.

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