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Northern Trust Press Release

 
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Northern Trust helps to secure recognition of tax-transparency for asset pooling vehicle from Swedish Tax Agency

 

New ruling supports investment by asset owners and asset managers in a Common Contractual Fund

 

London and Stockholm, August 30, 2012 —

Following a landmark ruling from the Swedish Tax Agency, Northern Trust has become the first custodian to work with a client to secure reduced withholding tax rates for Swedish investors holding equities through a tax-transparent, cross-border asset pooling vehicle. Investing in an Irish-domiciled Common Contractual Fund (CCF) could potentially increase total return for Swedish investors via such vehicles by approximately 50 basis points a year, according to Northern Trust’s proprietary calculations.

Confirmation of tax-transparency by tax authorities is pivotal for cross-border pooling. It enables underlying investors in a pooled investment fund to obtain the same withholding tax rates as if they had invested directly in equities, with the added benefits of investing via a pooled fund – for example, tighter governance, better risk management, economies of scale and access to new asset classes.

“Removal of the tax drag is good news for investors and their investment managers,” said Phillip Caldwell, asset servicing pooling product manager at Northern Trust. “Investing in a tax-transparent asset pooling vehicle should result in greater returns for Swedish tax-exempt investors and may help investment managers to achieve better performance for their tax-exempt institutional investors.”

Earlier this year, using a model that incorporates dividend taxation rates across a range of popular equity mandates, Northern Trust announced proprietary analysis which found that a tax-transparent asset pooling vehicle can enhance returns by as much as US$81 million on a US$1 billion portfolio invested in broad market indices over a 10 year period. 

“As Swedish institutional investors, such as pension funds and insurance companies, continue to grapple with regulatory change and global economic uncertainty, they increasingly face demands to reduce bottom-line costs and improve top-line performance,” said Belinda Burgess, country head of Northern Trust in the Nordics. “Choosing the right investment vehicle is one way to achieve this, and we are pleased to provide asset servicing solutions for tax transparent-asset pooling vehicles that help our Swedish clients achieve enhanced performance.”

 Northern Trust is an industry leader in the provision of asset pooling solutions to institutional investors and asset managers worldwide and was the first to fully support tax-transparent funds, created to pool the assets of investors with multiple tax rates, investing in multiple jurisdictions. As of June 30, 2012, Northern Trust has 25 clients on its tax-transparent, global pooling platform, with more than U$62 billion of assets under custody. It is actively involved in working with the UK tax authorities in their establishment of a new UK tax transparent asset pooling vehicle to sit alongside the Irish domiciled CCF, Luxembourg Fonds Commun de Placement and Dutch Fonds voor Gemene Rekening.

 About Northern Trust

 Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2012, Northern Trust had assets under custody of US$4.6 trillion, and assets under investment management of US$704.3 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.

 The material within and any linked material accessed via this communication is directed to eligible counterparties and professional clients only and should not be distributed to or relied upon by retail investors. For Asia Pacific markets, it is directed to institutional investors, expert investors and professional investors only and should not be relied upon by retail investors.

Northern Trust (Guernsey) Limited, Northern Trust Fiduciary Services (Guernsey) Limited, and Northern Trust International Fund Administration Services (Guernsey) Limited are licensed by the Guernsey Financial Services Commission. Northern Trust International Fund Administrators (Jersey) Limited and Northern Trust Fiduciary Services (Jersey) Limited are regulated by the Jersey Financial Services Commission. Northern Trust International Fund Administration Services (Ireland) Limited, Northern Trust Securities Services (Ireland) Limited and Northern Trust Fiduciary Services (Ireland) Limited are regulated by the Central Bank of Ireland. Northern Trust Global Services Limited has a Luxembourg Branch, which is authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF). Northern Trust Luxembourg Management Company S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF). Northern Trust Global Investments Limited has a Netherlands branch, which is authorised by the Financial Services Authority and subject to regulation in the Netherlands by the Autoriteit Financiële Markten. Northern Trust Global Services Limited has a Netherlands Branch, which is authorised and regulated in the Netherlands by De Nederlandsche Bank. Northern Trust Global Investments Limited has a Sweden branch, which is authorised by the Financial Services Authority and subject to regulation in Sweden by the Finansinspektionen. Northern Trust Global Services Ltd (UK) Sweden Filial is authorised by the Financial Services Authority and subject to regulation by the Finansinspektionen. Northern Trust Global Services Limited operates in Abu Dhabi as a Representative Office. Our registered office is authorised and regulated by the Central Bank of the United Arab Emirates. The Northern Trust Company operates in Australia as a foreign authorised deposit-taking institution (foreign ADI) and is regulated by the Australian Prudential Regulation Authority. The Northern Trust Company has a branch in China regulated by the China Banking Regulatory Commission. The Northern Trust Company of Hong Kong Limited is regulated by the Hong Kong Securities and Futures Commission. Northern Trust Global Investments Japan, K.K. is regulated by the Japan Financial Services Agency. The Northern Trust Company has a Singapore Branch, which is a foreign wholesale bank regulated by the Monetary Authority of Singapore. The Northern Trust Company operates in Canada as The Northern Trust Company, Canada Branch, which is an authorised foreign bank branch under the Bank Act (Canada). Trustee related services in Canada are provided by the wholly owned subsidiary The Northern Trust Company, Canada, an authorised trust company under the Trust & Loans Companies Act (Canada). Deposits with The Northern Trust Company and its affiliates and subsidiaries are not insured by the Canada Deposit Insurance Corporation.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. For more information about this notice, see http://www.northerntrust.com/circular230

 
 
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