Northern Trust has launched an investment fund platform that will consist of a series of collective funds sub-advised by investment managers retained and overseen by Northern Trust.
The Northern Trust Company Sub-Advised Collective Funds Trust will provide cost-efficient access to the US private and public retirement market.
Each collective fund will be marketed and distributed by its respective sub-adviser.
"Collective trust funds are increasingly seen as an attractive vehicle for investment options offered in defined-contribution and 401(k) retirement plans, due to their potential for greater pricing flexibility and other advantages," says Peter Cherecwich (pictured), head of global fund services North America and chief operating officer for corporate and institutional services at Northern Trust. "Asset management firms that aim to grow in this market can now be considered for our collective trust fund structure, under which Northern acts as trustee as well as providing custody, fund accounting and fund administration."
As is the case with registered mutual funds, collective trust funds can offer daily valuation and daily participant investment direction, as well as National Security Clearing trading capabilities, combined with the advantages of commingling scale.
Unlike registered funds that are available to the general public, however, collective trust funds are available only to tax-exempt 401(k), pension, profit-sharing and governmental retirement plans.
Collective trust funds also typically have a lower cost structure than mutual funds, making them an attractive alternative for plan sponsors with fiduciary responsibility.
Northern Trust’s collective funds trust will be supported through the global fund services unit, which has been servicing investment manager and fund company clients for more than 30 years.
"In today’s increasingly risk- and cost-conscious market, we can offer a fund product that combines efficiency with a thorough oversight process," says Paul d’Ouville, global head of asset servicing product management for Northern Trust. "For asset management firms launching new strategies or seeking new distribution channels, our collective trust presents a cost-effective solution to help achieve their business goals."