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Stephen N Potter, President of Northern Trust Global Investments

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Northern Trust launches emerging manager funds for institutional investors

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Northern Trust has launched two emerging manager collective funds for institutional investors. The Emerging Manager US Equity Funds are designed to provide access to smaller, undiscovered investment boutiques with the primary objective of generating excess returns for corporate and public pension plan investors.

“We are pleased to offer these new funds, making the investment expertise of emerging managers available to a broader array of institutional investors in a cost-effective vehicle,” says Steve Potter (pictured), President of Northern Trust Global Investments (NTGI), the asset management arm of Northern Trust. “As a pioneer in the emerging manager space and a recognised source for research on emerging managers, Northern Trust is well-positioned to bring the potential benefits of these specialist firms to the market with the appropriate level of risk management and transparency.”

Northern Trust’s emerging manager funds are daily valued collective funds open to ERISA-qualified corporate and public employee pension plan investors. The Northern Trust Company of Connecticut (NTCC) serves as the trustee, selects sub-managers and monitors the investments of each sub-manager in the two funds: NTCC Emerging Manager US Equity Non-lending Fund, benchmarked to the Russell 3000 Index of US stocks; and NTCC Emerging Manager Large Cap Non-lending Fund, benchmarked to the Russell 1000 Index of large-cap US stocks.

The funds currently utilise 11 sub-managers in a multi-manager structure.

“Our research over many years has demonstrated that emerging managers offer the potential for superior performance. The Emerging Manager US Equity Funds provide access to these emerging managers while reducing single-manager risk through manager diversification,” says Christopher Vella, Global Director of Research for Manager-of-Managers Programs at Northern Trust. “The funds also may provide exposure to a diverse group of investment managers.”

The Emerging Manager US Equity Funds are structured utilising the same philosophy and process employed across all Northern Trust multi-manager portfolios. The emerging manager funds may be used as a core holding within a diversified actively managed asset allocation framework or as a satellite allocation complementing a predominantly passive investment approach.

Northern Trust has offered emerging manager programs since 1993 and invests approximately USD5.7 billion with more than 40 emerging investment management firms through its Manager-of-Managers Programs as of March 31, 2011. The manager-of-managers approach is designed to help large institutional investors access these smaller firms by addressing capacity constraints and concerns about due diligence, business risks, and administrative overhead. The appropriate implementation of a multi-manager fund is possible through extensive manager research and expertise in portfolio construction.

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