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Strategies

Index Equity

Cost-effective strategies designed to consistently deliver the market exposure you seek.

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Principles of Investing

Manage Risk and Maximize Trading Efficiency During Rebalancing Events

A disciplined and risk-aware investment process, backed by the size-and-scale of a trillion-dollar operating platform, enables us to keep trading costs down and navigate key events with confidence.

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Industry Average Tracking Error Around Rebalancing Events (in basis points)

Rebalancing/Reallocating can entail transaction costs and tax consequences that should be considered when determining rebalancing/reallocation strategy. Source: eVestment Analytics, Northern Trust, as of July 31, 2023. The industry Average is derived from 10 products in the eVestment US Passive Russell 1000 Equity Universe -products containing an additional focus to index tracking such as tilting, sustainability, or tax-management are omitted from the analysis. Tracking error based on Russell 1000 rebalancing events every year end of June. Before rebalancing is May, during rebalancing is June, and after rebalancing is July. The shown values are average of 5-yearly rebalancing events.

Principles of Investing

Maintain Optimal Liquidity for Incremental Return Opportunities With Minimal Risk

Replicating an index on any given day is not very difficult, but doing so consistently over several decades requires a deep understanding of how to navigate risk while finding the most efficient sources of return-mimicking exposures.

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Excess Return vs Tracking Error for All Passive Equity (< 50bps TE)

Source: eVestment Analytics, Northern Trust. As of June 30. 2023. All passive Equity universe is sourced from eVestment and consists of 311 total passive equity products with trailing 10-year tracking error less than 50 bps. Tracking error and excess returns are based on the Manager Preferred Benchmark for each strategy as defined in eVestment.

Approach

The best way to achieve index-like risk and return characteristics is by managing transaction costs and tracking error throughout the investment process. We help investors closely track their chosen benchmark exposures, while they rely on our integrated global platform backed by scale, experience, and infrastructure.

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    Contact Us

    Interested in learning more about our investment strategies? 

    The information contained herein is intended for use with current or prospective clients of Northern Trust Investments, Inc (NTI) or its affiliates. The information is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. Northern Trust Asset Management’s (NTAM)  and its affiliates may have positions in and may effect transactions in the markets, contracts and related investments different than described in this information. This information is obtained from sources believed to be reliable, its accuracy and completeness are not guaranteed, and is subject to change. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor.

     

    This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are the property of their respective owners. Information is subject to change based on market or other conditions.

     

    All securities investing and trading activities risk the loss of capital. Each portfolio is subject to substantial risks including market risks, strategy risks, advisor risk, and risks with respect to its investment in other structures. There can be no assurance that any portfolio investment objectives will be achieved, or that any investment will achieve profits or avoid incurring substantial losses. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Risk controls and models do not promise any level of performance or guarantee against loss of principal. Any discussion of risk management is intended to describe NTAM’s efforts to monitor and manage risk but does not imply low risk.

     

    Environmental, Social and Governance (ESG) investing involves certain risks because the methodology of an underlying index selects and assigns weights to securities of issuers for nonfinancial reasons, a strategy may underperform the broader equity market or other strategies that do not utilize ESG criteria when selecting investments. The companies selected by an index provider as demonstrating ESG characteristics may not be the same companies selected by other index providers that use similar ESG screens. In addition, companies selected by an index provider may not exhibit positive or favorable ESG characteristics. Regulatory changes or interpretations regarding the definitions and/or use of ESG criteria could have a material adverse effect on a strategy’s ability to invest in accordance with its investment policies and/or achieve its investment objective. 

     

    Past performance is not a guarantee of future results.
    Performance returns and the principal value of an investment will fluctuate. Performance returns contained herein are subject to revision by NTAM. Comparative indices shown are provided as an indication of the performance of a particular segment of the capital markets and/or alternative strategies in general. Index performance returns do not reflect any management fees, transaction costs or expenses. It is not possible to invest directly in any index. Net performance returns are reduced by investment management fees and other expenses relating to the management of the account. Gross performance returns contained herein include reinvestment of dividends and other earnings, transaction costs, and all fees and expenses other than investment management fees, unless indicated otherwise. For additional information on fees, please refer to Part 2a of the Form ADV or consult an NTI representative.

     

    Forward-looking statements and assumptions are NTAM’s current estimates or expectations of future events or future results based upon proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve.  Actual results could differ materially from the results indicated by this information.

     

    Not FDIC insured | May lose value | No bank guarantee

    Northern Trust Asset Management is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.