Tax Exempt Portfolios Actively Managed Against Broad or State Specific Municipal Benchmarks
Philosophy & Objective
Municipal Fixed Income assignments at Northern Trust are constructed with the goal of generating consistent performance with predictable volatility. We emphasize the objectives of:
- Managing to the client's unique tax situation
- Preserving principal
- Generating current income
- Dampen the volatility of other asset classes
- Providing liquidity in case of need
Investment Process
We have investment views, but our trading scale and skill allows us to be modest in taking traditional manager bets (duration and credit). We add thoughtful approaches to yield curve, sector, structure & state decisions, yet aiming to end up with portfolios that are often higher quality AND higher return than their benchmarks.
Managing credit risk is the cornerstone of our research process:
- Strong sell discipline focused on identifying early signs of credit deterioration
- Separate credit approval process from manager's purchase decision
- Issuer financials are tracked electronically on a timely basis
- Individual state analysis identifying macro trends
Investment Style
We incorporate key elements of our relative value style, emphasizing a rigorous security selection process while closely monitoring and controlling portfolio risk relative to a client-selected benchmark.
Active Management
We strive to capitalize on market inefficiencies to maximize total return - both income return and price appreciation:
- The process goes beyond credit and interest rate decisions
- Key value-added factors include yield curve positioning, security selection/structure decisions, and sector/state analysis
Disciplined Risk Controls
We believe a comprehensive portfolio review process combined with a key understanding of risk is essential to meet our client's investment objectives:
- Risk exposure guidelines established in line with client expectations
- Daily monitoring of duration, sector concentration, and credit quality
Fundamental Research
We combine original credit and macroeconomic research with experience and judgment in the development of portfolio structure and characteristics:
- Both issuer credit and enhancement (insurance) providers are evaluated
- The structural risk of each security is evaluated and actively monitored
Flexible Structures
Northern Trust's capabilities can be delivered as separate accounts or mutual fund vehicles.
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Scott Warner |
Scott Warner
Scott B. Warner is a Vice President and Director of Fixed Income Product Management at Northern Trust in Chicago.
In this role, Scott is responsible for the investment product capabilities of Northern Trust asset management’s fixed income business across the Americas, EMEA and APAC. His responsibilities include product positioning, development, innovation, and delivery. Prior to his current role, Scott was a senior portfolio manager in the Ultra Short Fixed Income group responsible for separately managed accounts for taxable and tax-exempt mandates. Scott was also the co-manager of the Northern Trust Ultra Short Fixed Income Fund (NUSFX) from June 2009 until March 2012. Previously, Scott was a portfolio Manager in short duration fixed income and was responsible for the collective funds and various custom cash funds.
Prior to joining Northern Trust in 2000, Scott was responsible for client servicing, mutual fund accounting, and fund administration at The Wadsworth Group in Phoenix, Arizona., now part of US Bancorp Fund Services, LLC.
Scott received an MBA from the University of Chicago Booth School of Business with concentrations in accounting, economics, finance, and international Business. He received a B.S. in finance with honors from the W.P. Carey School of Business at Arizona State University.
Scott is a member of the CFA Society of Chicago and the National CFA Institute. He also serves as a board member of Art Encounter (www.artencounter.org).
Analysis & Research
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