Northern Trust selected by Osmosis to support fossil fuel-free fund

Asset servicing solutions to support launch and distribution strategy for $2 billion sustainable investment manager.

By Jonathan Watkins

Northern Trust has been selected by Osmosis Investment Management to provide fund administration, global custody and depositary services for its new fossil fuel-free UCITS Common Contractual Fund (CCF). 

The strategy, which Osmosis developed amid growing investor appetite to remove carbon risk from investor portfolios, will allow institutional investors to target an uncorrelated source of sustainable alpha from their core equity exposure, with a positive environmental focus. 

This latest addition to its suite of resource efficient strategies brings Osmosis’ exfossil fuel assets under management to over $600 million.

The appointment extends the relationship between both organisations, with Northern Trust already supporting several Osmosis funds, including the Osmosis Resource Efficient Equity Market Neutral Fund, launched in 2018.

The CCF is a tax-transparent fund vehicle, allowing its underlying investors to benefit from double taxation treaties to reduce withholding taxes in markets that recognise transparency as if they held the assets directly.

Created in 2004 as a solution for cross-border pension fund pooling, tax-transparent funds have developed as an optimum vehicle for asset managers to facilitate cross-border distribution of funds to institutional investors.

“As we further expand our fund range to meet client demand for sustainable investment strategies, we need to partner with organizations able to deliver flexible, efficient servicing solutions for our investors,” said Ben Dear, CEO at Osmosis Investment Management.

Northern Trust’s expertise in supporting tax-transparent fund structures, allied with its ability to deliver pan-European servicing solutions, aligned strongly with our plans for the launch and development of this fund.”

Northern Trust has made a fast-paced start to 2021, securing mandates or renewals in Norway, Australia and in the US through Westwood Holdings Group.

The custodian has also expanded its Nordics presence, won a series of mandates for its FX currency management services and enhanced investment reporting for its Middle East clients.

Earlier this week, it also bolstered its front-to-back Whole Office solution through a partnership with hedge fund Two Sigma to offer Venn, its flagship cloud-based investment analytics platform, to clients.

“We are delighted to extend our relationship with Osmosis and support them in executing this fund launch,” said Clive Bellows, head of global fund services Europe Middle East Africa at Northern Trust.

In this case, the use of a CCF supports our client’s growth and distribution strategy – allowing them to draw on the benefits of tax-transparency for their investors and help bring this fund efficiently to market.”