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 loses ART
It’s certainly a time of chunky winners and losers. Northern Trust has lost the part of Australian Retirement Trust (ART) it was still administering to State Street, headed up in Australia by Tim Helyar, as a result of the merger that created the fund in the first place.
“After a comprehensive and thorough tender process, Australian Retirement Trust has chosen State Street as our preferred and primary custodian and investment administrator,” said chief financial officer Anthony Rose on Tuesday (November 1).
The official confirmation followed an initial report by this publication based on information from industry sources. The loss is likely the first – or at least, the biggest – of Northern Trust’s in Australia. Northern’s first asset servicing win in the region was NZ Super from its formation, followed by the Future Fund since its formation. QSuper, the larger of the two funds that now comprise ART, retained Northern Trust as its custodian; Sunsuper had State Street.
It’s actually something of a homecoming for State Street, which lost the QSuper business to Northern Trust in 2018 following a review by then-head of investment operations Matthew Heeney. It originally won the business from NAB Asset Servicing in 2012.
State Street and Northern Trust both declined to comment.
