Northern Trust expands Australia team for customised solution demand

Northern Trust has expanded its Melbourne office last week by establishing its asset management sales and client service team.

The asset servicing firm said its expansion is to help support demand for customised asset management solutions.

"We will focus on data management, index funds, and we have about $450 billion under management," Northern Trust Asset Management's president, Stephen Potter, said.

"We've seen interest in our engineered equity business using 'smart beta.' These are customised designed indices that are really driven by quantitative research and factor models that are geared to invest in securities through different cycles and should outperform the index as a group," Potter told Money Management.

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Commenting on the demand Potter said that there is a very strong trend away from pure fundamental active management due to the underlying research and predictability of outcomes the firm's portfolios construct with quant models that are geared to outperform the index funds.

"Think of it as a middle ground between fundamental active which has more challenges with quantitative easing and keeping up with the indices. Engineered equity products can typically do them better and with pure benchmark index funds," he said.

Potter added that the trend towards engineered equities was on the move in the superannuation market.  

"We're doing focused work on pensions on high net worth clients around safe keeping their assets and managing the long-term."

Northern Trust said they passively manage about half of its assets and have nearly $500 billion managing in active strategies including fixed incomes and alternatives assets.

The firm's other focus is environmental, social, and corporate governance investing in conjunction with its engineered equities.  

The expansion sees the firm's Asia Pacific vice president for institutional business and strategy, Bert Rebelo, relocate to Melbourne later this year to take up the role as head of business development in Australia and New Zealand for Northern Trust Asset Management.

Joining him will be Shane Teunissen as the firm's senior institutional sales manager, and Ann-Marie Garry as sales associate.  

The US-based Northern Trust first established their Melbourne office in 2007 to provide asset servicing and custody solutions to clients in Australia and New Zealand.