"The Northern Funds’ Ultra-Short Funds have exhibited strong asset growth since inception, which validates our view that clients value a consistent, proven investment process in a total return product that is different from a traditional money market fund," said Colin Robertson, Managing Director of Fixed Income for Northern Trust. "As clients rethink their investment strategies in this low interest rate environment, we expect our Ultra-Short funds and liquidity management ETF strategies will continue to acquire assets and gain significant traction in the marketplace."
Launched in June 2009, the funds have a highly focused strategy that draws on a legacy of more than 25 years of experience with risk-controlled ultra-short duration strategies. The funds are designed to take modest interest rate risk, credit risk and liquidity risk compared to money market funds.
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The two funds have slightly higher volatility and lower liquidity than money market funds and seek to offer less volatility than intermediate and longer-duration fixed income securities.
While both seek to yield more than a money market fund with potential for capital appreciation, the Tax Advantaged Ultra-Short Fund seeks to provide investors in higher tax brackets more after tax yield by investing in municipal securities.
"The investment process for both funds combines a top-down macroeconomic view with intense bottom-up credit research in an effort to generate yield with moderate risk," said fund manager Carol Sullivan of Northern Trust. "We maintain well-diversified portfolios of investment grade securities with a neutral target duration of one year, plus the flexibility to shorten or extend the portfolio up to another six months depending upon our macro forecasts. This flexibility helps us to position the two Ultra-Short Funds in a way that captures opportunity but also provides some protection in a rising rate environment."
The minimum investment required for each fund is $2,500. The expense ratio for Northern Ultra-Short Fixed Income Fund is .26 or $26 for every 10,000 invested. The expense ratio for Northern Tax-Advantaged Ultra-Short Fixed Income Fund is .25%. According to Morningstar, the average expense ratio for Ultra-Short Funds is .66%.
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By GlobalDataPlease note that the Funds are not money market funds, which strive to maintain a $1.00 net asset value. The share price of the ultra-short funds fluctuate with their returns and are designed to complement the cash portion of an investor’s portfolio, not replace it. An investment in either fund could result in a loss of principal.
