NORTHERN TRUST GLOBAL INVESTMENTS

Transcription

1 Investor Day 2005 Northern Trust Strategic Differentiation NORTHERN TRUST GLOBAL INVESTMENTS Terence J. Toth President Today s Agenda NTGI Strategic Profile Competitive Differentiators Market Position Bundled Solutions Complementary Services NTGI Positioned to Capture Outsourced Activities Summary and Q&A Northern Trust Global PAGEs 2 1

2 NORTHERN TRUST GLOBAL INVESTMENTS M I S S I O N To be a world-class global investment manager so Northern Trust can be recognized as the leading provider of global investment management services, constructing innovative investment solutions with a focused set of active, quantitative and manager of managers capabilities for the personal and institutional marketplaces. 3 Strategic Profile Northern Trust Global s is a Manufacturer of investment products and Distributor of investment solutions with a Global Infrastructure supporting both manufacturing and distribution Northern Trust Global PAGE s 4 2

3 World Class Manager $589 Billion Assets Under Management as of March 31, 2005 Across Asset Classes A Diversified Asset Manager Across Styles $255 Billion (43%) Short Duration $229 Billion (39%) Equities $100 Billion (17%) Fixed Income Active $366 Billion (62%) $196 Billion (33%) Quantitative Other $5 Billion (1%) (Alternative Asset Classes) Manager of Managers $27 Billion (5%) Northern Trust Global PAGE s 5 Positioning Our Business Leveraging the Northern Trust Franchise Building upon our reputation as a trusted provider of financial services in the personal market with sophisticated investment capabilities Capitalizing on our strengths in the institutional market as a world-class asset servicer to expand our world-class institutional asset management organization Increasing our direct sales capabilities to penetrate further the personal and institutional marketplaces worldwide Northern Trust Global PAGE s 6 3

4 Northern Trust Global s Key Competitive Differentiators Competitive Differentiators Market Position Bundled Solutions Complementary Services Differentiators Fuel Growth Personal U.S. Institutional U.S. and Non-U.S. Northern Trust Global PAGE s 7 Strong Market Position Competitive Differentiators Market Position Bundled Solutions Complementary Services Industry Leadership Broad Client Base Excellent Growth Global Reach Northern Trust Global PAGE s 8 4

5 Established Industry Leader $589 Billion Assets Under Management as of March 31, th largest worldwide asset manager 1 4 th largest U.S. tax-exempt asset manager 2 3 rd largest institutional index manager 2 6 th largest bank-managed mutual fund family 3 1 Global Investor GI Pension & s 3 FRC Monitor; based on long-term funds Northern Trust Global PAGE s 9 Broad Client Base Total AUM Equities 39% Fixed Income 17% Short Duration and Other 44% $589 Billion Assets Under Management as of March 31, 2005 Personal Institutional Equities 36% Fixed Income 13% Short Duration 51% $478 Billion $111 Billion Equities 50% Fixed Income 35% Short Duration 12% Other 3% 10 5

6 Excellent AUM Growth ($ Billions) $600 12/31/98 to 3/31/05 % Change CAGR Assets Under Management +153% +16% Excluding Index Acquisition +121% +13% S&P 500-4% -1% $572 $589 $500 $400 $300 $233 $292 $326 $320 $303 $479 Acquired Index Assets $404 $200 $100 $ Q05 11 Extensive Global Reach United States Canada (Scotia McLeod) France (Groupama) Ireland (KBC) United Kingdom Germany (Helaba) Japan (Mitsubishi) Italy (Mediolanum) China (2007) Hong Kong 12 6

7 Unique Range of Offerings Competitive Differentiators Market Position Bundled Solutions Complementary Services Active Quantitative Manager of Managers 13 Focused Set of Active Management Large Cap Growth Equity Large Cap Value Equity International Growth Equity Enhanced Cash Short Duration Intermediate Fixed Income Core Fixed Income Core Plus Fixed Income Municipal High Yield Quantitative Management U.S. Equity U.S. Fixed Income EAFE Index Tax-Advantaged U.S. Enhanced Equity Index U.S. Structured Small Cap Enhanced EAFE Index Manager of Managers Programs Program Solutions Optimized Portfolio Solutions Emerging/ Minority Managers Hedge Funds Private Equity Multi-Advisor Funds 14 7

8 Growth Strategy Linked to Core We continue to invest in core capabilities and proactively seek out joint venture and acquisition opportunities Acquisitions Active Management Northern Trust Value Investors (2000) Quantitative Management ANB Management (1997) Deutsche Bank Index and Enhanced Business (2003) Manager of Managers RCB International (1995) Distribution United States 5 key relationships Canada France Germany Italy Japan 15 Bundled Programs Provide Total Solutions Competitive Differentiators Market Position Bundled Solutions Complementary Services Personal Market: Optimized Portfolio Solutions Institutional Market: Drive for Alpha Risk Control 16 8

9 Market Trends Personal Markets: A Holistic Approach The search for less volatile returns leads to asset allocation Total, bundled, integrated solutions A blended architecture of proprietary and other managers, bifurcated between high alpha and core low-risk tax sensitive A more consultative relationship Institutional Markets: The Search for Alpha Gatekeeper controlled A game of performance and exclusion Search activity dominated by style-specific specific mandates Increased use of alternatives, including hedge funds and private equity Outsourcing problems to investment specialists 17 Personal and Institutional Solutions Active Management Quantitative Management Manager of Managers Programs Research Trading Portfolio Construction Personal Institutional 18 9

10 Personal Optimized Portfolio Solutions Centralized Portfolio Construction Team Local PFS Portfolio Managers Unique Construction Methodologies Products Active Quantitative Manager of Managers Optimized Portfolios Portfolio Tools Asset Allocation Research Manager Due Diligence Tax Sensitivity Optimization Open Architecture Platform 19 Institutional Delivering Alpha and Low Cost Beta Alpha Traditional Asset-Allocated Portfolios Beta Search Low Cost Northern Trust Hedge Funds Private Equity Enhanced Quant Active Expanding Array of Index Fixed Income Liability Matching Programs 20 10

11 Highly Rated Complementary Services Competitive Differentiators Market Position Bundled Solutions Complementary Services Securities Lending Transition Management Commission Recapture Securities Brokerage 21 Leveraging Our Relationship Client Focus Securities Lending Transition Management Commission Recapture Securities Brokerage 22 11

12 Securities Lending Building Upon Our Custody Base Securities Lending Collateral ($ Billions) $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 CAGR: 46% $210 $188 $133 $ Q 2005 Custody Management Taft-Hartley Plan Securities Lending S&P 500 Separate Account 23 Transition Management Building Upon Our Index Expertise Transition Management Assets Transitioned ($ Billions) CAGR: 76.5% $50 $40 $30 Assets Transitioned Number of Assignments $26 $44 1,000 Number of Assignments $20 $16 $10 $8 250 $ Leads to Management Opportunities ERISA Plan Transition Assignment led to: U.S. and EAFE Mandates High Yield Mandate Workers Benefit Plan Transition Assignment led to: Ending exclusive use of a competitor for index management Russell 2000 Mandate 24 12

13 Capturing Outsourced Activities Manager of Managers Expertise Experienced, global, research-based organization Driven to uncover managers who are highly prized for their intellectual lectual capital and embrace strategies that capitalize on dynamic markets Designs and constructs customized portfolios that provide superior returns in a risk-aware environment Global Locations: Chicago New York Toronto London San Francisco Stamford $27 Billion In Assets 84 Professionals and Research Staff Northern Trust Global Advisors Over 175 Managers Worldwide Pioneer of Manager of Managers Programs (1979) Offerings Include: Total Plan Outsourcing Optimized Portfolios Emerging and Minority Manager Hedge Fund Strategies Private Equity Multi-Advisor Funds 25 Harnessing Our Intellectual Capital to Meet Our Clients Outsourcing Needs Personal Personal Optimized Portfolio Solutions Multi-Advisor Funds Institutional Hedge Funds Private Equity Institutional Program Solutions sm Emerging and Minority Manager Program 26 13

14 Outstanding Growth in Manager of Managers AUM Manager of Managers Assets Under Management: $27 Billion $ Billions $30 $25 CAGR: 42% $26.8 $27.0 $20 $17.7 $15 $12.4 $10 $5 $ Q Northern Trust Global s Key Competitive Differentiators Competitive Differentiators Market Position Bundled Solutions Complementary Services Differentiators Fuel Growth Personal U.S. Institutional U.S. and Non-U.S

15 Fueling Growth in Personal and Institutional Markets with expanded distribution and strong investment performance Increase distribution by: Constructing innovative Strengthen performance by: Attracting and retaining industryindustry- investment solutions for personal and institutional clients worldwide leading talent Adding additional leadership Continuing to crosscross-sell our active, and resources to our investment teams quantitative and manager of managers capabilities Selectively deepening our array Opening additional direct channels of products and services to meet the demands of both personal and institutional clients worldwide Offering complementary services directly and bundled with our investment capabilities Northern Trust PAGE Global s 29 Investor Day 2005 Northern Trust Strategic Differentiation NORTHERN TRUST GLOBAL INVESTMENTS Questions 15