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Financial Intermediary
Learn about asset management solutions designed for Retirement Plan Advisors, TAMPs/Outsourcing Providers, Subadvisory Program Sponsors, RIAs/Financial Advisors and Trust Institutions.
Institutional
Learn about asset management solutions including: global index management, active equity and fixed income, target retirement date funds, and manager of manager programs.
Individual
Get answers to your investment challenges with asset management capabilities including alternatives, exchange traded funds, fixed income, mutual funds and tax-advantaged equity.
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Hedge Funds

 
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Diversified Fund of Hedge Funds at Northern Trust

Hedge funds usually target positive absolute returns rather than seeking to outperform a specific benchmark of one sort or another. With low correlation to traditional equity and fixed income investments, hedge funds can add valuable diversification benefits to a portfolio. By grouping a number of skilled hedge fund managers together, with each pursuing one or more of a number of unrelated strategies, a fund of hedge funds amplifies portfolio diversification benefits and provides ongoing monitoring and risk management capabilities.
Getting access to the best hedge fund managers is not always easy, nor is choosing among the literally thousands of managers around the world. Obstacles to hedge fund investing include identifying managers, high minimum investment requirements, lengthy lock-up periods and the risk of catastrophic losses, just to name a few.

Investing in a fund of hedge funds can resolve these problems. The value of the product is largely captured in three ways: portfolio construction, liquidity, and monitoring. Portfolio construction means a fund of funds manager should have the relationships in and knowledge of the industry to identify the right hedge funds, and then combine those funds in a way to meet the portfolio’s risk and return objectives. Liquidity is important as a fund of hedge funds is often able to offer entry to its investment vehicle with lower minimums than some individual hedge funds, and may have shorter or no lock-up periods or withdrawal penalties. Monitoring is also an important service that a fund of fund provides. While diversification of the portfolio with a number of hedge funds reduces exposure to big losses at any one fund, ongoing monitoring via phone calls, office visits, and underlying security-level transparency provides a higher degree of investment oversight.

Employing a skilled fund of hedge funds manager who has the right infrastructure, personnel, risk management capabilities and business model can create significant value. As market participants continue to discover this value, funds of hedge funds are growing in profile and assets managed. Fees, track records, and manager experience are all important considerations when choosing a fund of hedge funds.

David Lester

David Lester

Vice President
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David Lester

David Lester

Vice President
 

David Lester is a Vice President at Northern Trust Global Advisors. Based in the Toronto office, David leads the asset management sales effort at Northern Trust in Canada. With a focus on providing innovative investment and outsourcing solutions to the marketplace, David will be working closely with pension plan sponsors, charitable organizations, and other institutional investors. David started his investment career in 1996 with a retail mutual fund company. Prior to joining Northern Trust, David spent 12 years at SEI, most recently as the Director of National Accounts where he lead the firm’s institutional sales and marketing efforts.

David has authored a range of articles on pension-related topics in addition to speaking at industry conferences. He is a past chair of the Ontario Regional Council of the Canadian Pension & Benefits Institute and is a member of the Toronto CFA Society.

David holds a Bachelors Degree in Mechanical Engineering from McGill University where he was awarded the British Association Medal for Great Distinction. David graduated from INSEAD in Fontainebleau France with distinction, where he received a Masters Degree in Business Administration.

Manager of Managers Investment Solutions Brochure

Identify talent, manage risk, monitor performance.
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This material is provided for informational purposes only and does not constitute an offer of any of the investment products described herein. Each investor should consult their own advisers regarding the legal, tax, and financial suitability of this type of investment. No person should invest who is not, either alone or with their advisers, able to evaluate the merits and risks of this investment. Access to information about Northern Trust hedge funds of funds and private equity funds of funds is limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments. Subscriptions may only be made and received on the basis of the Confidential Offering Memorandum which investors are advised to read carefully before investing in this product.


Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. For more information, read our legal and regulatory information about individual market offices.