Northern Trust Asset Management has launched the Sterling Ultra-Short ESG strategy, expanding its cash segmentation suite to cater to the varying investment horizons for investors, whilst incorporating Environmental, Social and Governance factors.
The strategy is designed to align with investors’ specific risk, return and liquidity needs and aligns with Northern Trust Asset Management’s belief that investors should be compensated for the risks they take.
“We are pleased to expand our range of solutions to better support investors’ income and liquidity requirements,” says Peter Yi, head of global short duration portfolio management at Northern Trust Asset Management. “As investors continue to face a ‘lower for longer’ interest rate environment, they may struggle to generate sufficient yield without increasing duration. Over the past 20 years, we’ve seen ultra-short bonds outperform money markets each calendar year (on average) and we believe combining the ultra-short duration with Environment, Social, Governance factors can create a compelling opportunity for investors.”
The strategy, open to investors globally subject to local distribution rules, will enable investment in securities with a target duration of one year and a maximum maturity of five years. The strategy supports “strategic” cash with longer term spending needs, and as part of a cash segmentation approach, can be complemented by the Northern Trust Sterling Conservative Ultra-Short ESG strategy for “reserve” cash with intermediate or uncertain spending needs with a three to nine month horizon, and the Sterling Money Market Strategy for “operational” cash for day to day spending needs.
“Northern Trust Asset Management understands that when it comes to cash one size doesn’t fit all,” says Marie Dzanis, head of Northern Trust Asset Management, EMEA. “We see continued demand from investors for sustainable investing solutions, in addition to the requirement to generate alpha. Combining sustainable investing and bond portfolios can provide a desirable outcome, because both focus on risk management. We have seen that bonds issued by companies with favourable ESG ratings tend to trade at tighter credit spreads for longer periods of time and can offer downside mitigation during periods of market turbulence.”