Northern Trust’s two ultra-short fixed income mutual funds have surpassed $4 billion in combined assets, as investors continue to seek alternatives to money market funds in a continuing environment of low-interest rates.
As of December 31, 2013, the Northern Ultra-Short Fixed Income Fund (NUSFX) had $1.45 billion in assets and the Northern Tax-Advantaged Ultra-Short Fixed Income Fund (NTAUX) had $2.63 billion, with combined assets up 47 percent from a year earlier.
“Our ultra-short strategies continue to grow in size, confirming our view that investors are eager to find lower risk strategies that still offer the potential for some incremental yield,” said Colin Robertson, Managing Director of Fixed Income for Northern Trust. “We believe that interest rates will remain low for the foreseeable future, helping our ultra-short funds gain further momentum among investors seeking a total-return strategy.”
Both ultra-short mutual funds were launched in 2009 as a complement to Northern Trust’s established cash management and ultra-short duration portfolio management strategies, including more than $200 billion across institutional and personal client assets. Ultra-short strategies are an option for investors with an appetite for modest interest rate risk, credit risk, and liquidity risk compared to traditional money market funds.
“With low interest rates and increased regulatory pressure on money market funds, investors are looking for opportunities to improve yield without taking more than moderate risk in the process," said Director of Ultra-Short Fixed Income Carol Sullivan. "We have been in this business a long time. Northern Trust has decades of separately managed account history in this strategy prior to creating the ultra-short mutual funds. Our emphasis on risk management, credit research, and diversified portfolio construction allows us to manage downside risk as the investment environment changes. In targeting a neutral duration of one year, the ultra-short funds can be part of an investor's larger fixed income strategy, helping them achieve specific investment goals."