Northern Trust doubles pooling assets
GLOBAL - Assets under custody in Northern Trust's cross-border pooling vehicles have more than doubled over the last year to reach $24bn (€17.7bn).
Interest in pooling vehicles came both from investment managers and pension funds for global multinationals and this interest is increasing, Northern Trust noted.
"The larger multi-nationals are still very interested in seeing how they can consolidate their assets in a tax-efficient manner," Aaron Overy, Northern Trust's pooling sales manager told IPE.
Since 2006, Northern Trust has been providing pooling services for the pensions assets of Dutch-British multinational Unilever.
"Investment managers see now they have to have tax-transparent funds within their product range to offer to smaller multi-national pension funds who perhaps cannot set up their own pooled vehicle but want the benefits of pooling and scale," Overy added.
"Currently, investment managers are running commingled funds or mutual funds which are tax inefficient they have a tax-drag upon them," he noted.
According to Overy, the tax drag is generated because withholding tax is applied at the rate of the vehicle, not of the investor. Through Northern Trust's solution, the withholding tax is being applied at the rate of the investor.
"Our solution supports both tax-transparent and non-tax-transparent funds with multiple countries of investment and multiple countries of investor," said Peter Cherecwich, head of institutional strategy and product development at Northern Trust, in a statement.
Since spring this year, Northern Trust has patents pending with the US Patent and Trademark Office (USPTO) and World Intellectual Property Organization (WIPO) for some of its cross-border pooling strategies.
As of June 30, Northern Trust had assets under custody of $4trn and assets under investment management of $766.5bn.