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Northern Trust to provide asset servicing for Nestle fund

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Northern Trust has been selected by Nestle to provide an asset servicing solution for its new Common Contractual Fund.

Services that will be provided by Northern Trust include custody, fund administration and performance reporting.

In addition, Northern Trust provided project management, and tax and legal experts who assisted in the fund’s successful launch.

The Ireland domiciled CCF is a tax-transparent, cross-border, asset pooling vehicle designed to enhance investment performance, governance, oversight, administrative control and investment management decision-making.

The fund is open to Nestle pension plans around the world and, at launch, plans from several countries will be investing.

"Northern Trust is a leader in tax-transparent asset pooling," says Jean-Pierre Steiner, chief executive of Nestle Capital Advisers. "Its extensive experience and expertise in launching and administering tax-transparent funds was helpful and comforting to us.

"Nestle Capital Advisers is not new to the concept of pooled vehicles – we have had a pooled fund in the form of an Irish unit trust since June 2001 through our Dublin domiciled Robusta fund range. However, we were attracted to efficiencies that can be gained through a tax-transparent vehicle such as the Dublin-domiciled CCF.”
 
This latest launch brings to 18 the number of tax-transparent and non tax-transparent umbrella and single strategy funds supported by Northern Trust for multinational and investment manager clients. Included in the range of tax-transparent funds administered by Northern Trust are Irish CCF, Luxembourg Fonds Commun de Placement and Dutch Fonds voor Gemene Rekening fund types.

"Studies we have carried out at Northern Trust have shown that using a non tax-transparent fund could impose a 30 percent withholding tax on U.S. equities held in such a fund, resulting in a ‘drag’ of approximately 90 basis points in fund performance. That’s a significant amount," says Aaron Overy, head of pooling business development at Northern Trust, Europe, Middle East and Africa. "Holdings in US equities tend to account for the greatest proportion of holdings in global equity funds because the US is such a large and important market. By pooling assets in a tax-transparent fund, such as a CCF, institutional investors and investment managers alike can achieve multiple benefits, including improved fund performance, in a tax-neutral way."

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