To meet increased investor interest in the fixed income markets, Northern Trust introduced two new mutual funds; the Northern Tax-Advantaged Ultra-Short Fixed Income Fund and the Northern Ultra-Short Fixed Income Fund. Both funds seek to generate higher yields than money market funds with less volatility than short duration bond funds. Carol Sullivan, director of Northern Trust’s Enhanced Cash Group, manages both of the funds.
The Northern Tax-Advantaged Ultra-Short Fixed Income Fund and Northern Ultra-Short Fixed Income Fund have a minimum initial investment of USD1 million and are intended for investors with an investment horizon of at least one year who want to move a portion of their money market fund assets into slightly longer maturity, higher yield securities. The Tax-Advantaged Ultra-Short Fixed Income Fund is designed to maximize after-tax return for investors in higher tax brackets by pursuing best net after-tax yield and total return opportunities in both taxable and tax-exempt securities.
The Northern Tax-Advantaged Ultra-Short Fixed Income Fund and the Northern Ultra-Short Fixed Income Fund strive to maintain a six- to 18-month average maturity, under normal circumstances, with a maximum security maturity of three years. They are managed in an effort to have an average portfolio quality rating of A or better, with all securities investment grade.
The funds are scheduled to make dividend distributions monthly and have a 1% redemption fee on shares sold or exchanged within 90 days of purchase. They are not money market funds, which maintain a USD1.00 net asset value (NAV); rather, the ultra-short duration funds’ NAVs will fluctuate with their returns.
As director of the group, for more than 10 years, Sullivan is responsible for managing Northern Trust’s taxable and tax-exempt investment accounts. Senior portfolio manager Patrick D. Quinn is co-manager of the Northern Tax-Advantaged Ultra-Short Fixed Income Fund and Scott Warner, also a senior portfolio manager, is co-manager of the Northern Ultra-Short Fixed Income Fund. After spending four years managing the Northern Collective Short Term Investment Fund, Quinn joined the Enhanced Cash Group in 2001. Warner joined Northern Trust in 2000 as a portfolio manager in Short Duration Fixed Income and has worked in the Enhanced Cash Group since 2006.
“As we continue to face uncertainty regarding an economic and financial market recovery, investors have become increasingly interested in the potential benefits of having fixed income assets in their investment portfolios,” says Colin Robertson, managing director of fixed income investments, Northern Trust. “For investors looking to get back into the market, the new funds are designed to provide opportunity for both higher yields than money funds and capital appreciation with minimal volatility.”
L.D.