Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Northern Trust hops on digital asset trend
Northern Trust’s Digital Assets and Financial Markets group will be led by Justin Chapman, the current global head of Market Advocacy and Research. The new group will combine the teams responsible for supporting digital asset markets with those “dedicated to providing market access and insights across the traditional securities services markets.”
“Traditional and digital markets already co-exist and the boundaries between the two will only continue to blur over time,” Chapman said. “At the same time as more institutional investors are entering the digital arena, the rest of the securities industry is also facing an unprecedented amount of change arising from new regulation, market evolution and the development of emerging technology capabilities.
“For investors wishing to navigate this environment, our new combined group will provide access to market-leading expertise, industry insights and continued innovations across all markets and all asset classes.”
Northern Trust has positioned itself as a “leading innovator in the digital transformation of securities servicing” by pioneering the use of blockchain in private equity fund administration in 2017 and supporting the tokenisation and fractionalisation of bonds in 2020. It also partnered in the launch of “institutional-grade” crypto asset custodian Zodia Custody in 2021.
“Clients are increasingly interested in the development of digital markets and investing in digital assets, alongside allocations to more traditional asset classes such as equities, fixed income, alternatives and private assets,” said Pete Cherecwich, president of Asset Servicing at Northern Trust.
“Rather than create separate business lines, by aligning our focus on digital and traditional markets together, we can continue to develop services and capabilities that truly reflect and enable our clients’ evolving investment strategies.”
