John Greene, senior international researcher at NTGI, said that a UK high-alpha product was rolled out during the third quarter of this year and an ambitious plan has been drawn up for a suite of similar funds covering all the main equity categories – US, Europe, Asia and global.
The multi-manager business is using a higher risk, concentrated approach to the UK high alpha fund, drafting in two underlying fund houses to run it, Majedie and Mirabeau. This contrasts with Northern’s usual approach of hiring four or five houses for its standard funds.
Mr Greene said the product was targeting returns of 3 per cent a year and so far “that level has certainly been met”. He declined to reveal the volume of assets in the vehicle but hinted that it was over the Ł30m (e44m) mark.
“We’re looking at high-alpha strategies in response to the growth of liability-driven benchmarks following the bear market and new regulations on pension funding”, he said.
Many pension funds are following investment strategies that invest in higher risk vehicles, which complement conservative investments in passive equity vehicles and fixed income.
The passive side of Northern’s business has scooped a huge Ł3.2bn indexing brief from Shriners Hospitals for Children, US-based providers of free orthopaedic care in 18 countries. The firm has also won $40m (e31m) from James S Kemper Foundation in the US. The assets will be split between manager of manager programmes and a variety of asset classes, including S&P 500, mid-cap and fixed income indices, small-cap fund of funds, hedge funds and private equity.
See Dream Team, pp28-29
