The asset management arm of Northern Trust (Nasdaq: NTRS) has launched the Northern Trust World Custom ESG Equity Index Fund. The Fund which has been customised according to six common value based exclusions enables institutional investors across the globe to meet commonly held environmental, social, and governance (ESG) criteria and support their investment objectives.
Throughout Europe, we see an increasing trend among institutional investors looking to include ESG criteria in their investment portfolios, said John Krieg, managing director of Northern Trust asset management in Europe, Middle East and Africa. Through the launch of this fund, we are able to respond to the most important ESG themes identified by our clients, and include the benefits associated with a pooled fund structure.
Northern Trusts customised index fund has been created based on six key common areas:
environment, human rights, anti-corruption, labour and supply chain, tobacco suppliers/producers, and controversial/indiscriminate weapons. Northern Trusts ESG screening methodology then excludes companies in these areas which:
Northern Trust engaged with a number of our institutional clients across Europe to identify any commonalities in the way that investors implement ESG screening criteria in developed and emerging markets, said Mamadou-Abou Sarr, senior product specialist for global index management at Northern Trust. This consultative approach offered us excellent insight into the various questions that investors had on human rights, labour, environment and anti-corruption.
The Fund is structured as a Common Contractual Fund which offers tax-transparency through exercising withholding tax treaties that exist between countries in which investors are based, and those in which they invest. Over the long-term, investors using tax-transparent structures may benefit from enhanced investment returns owing to reduced tax drag.
Northern Trust manages approximately US$17 billion in socially screened, active and passive managed portfolios for clients across the globe and has over 20 years of experience managing socially responsible portfolios and socially-screened assets. Earlier this year Northern Trust announced a partnership with MSCI to enhance its range of solutions for institutional investor clients across the globe through an agreement with MSCI ESG Indices and MSCI ESG Research.
CCFs are tax-transparent fund structures that provide investors with the opportunity to pool assets to achieve cost and administrative efficiencies. Tax-transparency is achieved through exercising withholding tax treaties that exist between countries in which investors are based, and those in which they invest. Over the long-term, a benefit to investors using tax-transparent structures may be enhanced investment returns owing to reduced tax drag.
As at 30 September 2012, Northern Trust managed over US$749.7 billion of assets for its clients worldwide. Of this US$344.4 billion are index assets with US$354 billion active, and the remainder managed in alternatives or multi-manager solutions. Northern Trust is currently ranked fourth largest index manager in the world, according to a Pensions & Investments magazine special report published in May 2012.
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 September 30, 2012, Northern Trust had assets under custody of US$4.8 trillion, and assets under investment management of US$749.7 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.
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