Northern Trust Bolsters $60B OCIO Unit | Chief Investment Officer

Northern Trust Asset Management has added three new hires to its outsourced-CIO (OCIO) business, strengthening its family office, retirement, and endowments and foundations services.

Jessica Hart, who led global fund construction for Northern Trust’s multi-manager investments unit, has been named as retirement practice lead. She will succeed John McCareins, who was recently appointed asset management lead in the Asia-Pacific region.

In her new role, Hart will lead a team that manages $60 billion in global multi-asset programs for both defined benefit and defined contribution plans, the firm announced.

The firm also named Lincoln Ellis, a 20-year veteran in family office investing, as senior CIO for the global family office practice. Dan Kutliroff, most recently director of OCIO sales in the Midwest for Mercer Investments, was also hired as senior sales specialist in the OCIO’s retirement practice.

For more stories like this, sign up for the CIO Alert newsletter. 

“Lincoln Ellis and Dan Kutliroff bring expertise in developing investment solutions for family offices and corporate plan sponsors, while Jessica Hart’s close collaboration with the retirement team on portfolio design, manager research, and client service will ensure a seamless transition for clients,” Joseph McInerney, head of Northern Trust’s multi-manager solutions, said.

According to CIO’s 2016 OCIO Buyer’s Guide, Northern Trust’s OCIO arm had $56.1 billion in full discretionary assets and 77 clients as of January 28, 2016. The unit is run by 53 portfolio managers and 79 relationship managers.

The firm also revealed it won 11 new outsourcing clients in 2015, and three in the first quarter of 2016.

Hart joined Northern Trust in 2000, and worked in a variety of senior positions in the multi-manager solutions group, most recently heading up manager research and fund management and leading at team of 15. She also serves as co-manager of nine multi-manager mutual funds.

She previously built up her expertise in the financial and commodities risk consulting group at Arthur Andersen (now Accenture) and has an MBA from New York University’s Stern School of Business.

Ellis most recently founded a consulting and asset management group Astor Janssen Holdings, and also spent eight years at Morgan Stanley. Kutliroff has more than 20 years of experience as an advisor to corporate retirement plans.

Last June, Northern Trust also nabbed Bei Saville, former head of alternatives at the $5.7 billion Helmsley Charitable Trust, to manage endowments and foundations clients.

The UK’s Financial Conduct Authority (FCA) has criticized the country’s fund managers for poor transparency and a lack of oversight of legacy products.

Some managers failed to disclose their products’ reliance on passive strategies, the FCA said in a thematic review of communications and documentation. Of 23 funds analyzed, three were found to be following “enhanced index strategies without adequately disclosing this.”

“The strategy, indexes, and degree of freedom the fund manager had in relation to each index were not adequately disclosed to investors,” the regulator said. “Investors did not know the fund’s strategy and were unable to judge the level of risk and return they might get from the fund compared to the index.”

Two more funds in the sample were found to have “material passive holdings that were not adequately disclosed.”

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

Such issues were more likely to emerge on funds that were not actively marketed, the FCA added, as these products often lacked adequate oversight or governance.

“Firms must monitor funds and treat customers fairly throughout the lifetime of the product irrespective of whether the fund is being actively marketed,” the FCA said.

Regulators in Sweden and Poland have recently turned their sights on “closet tracker” funds, while campaigners have lobbied the European Securities and Markets Authority to take action against managers that overcharge for passive products.

The review also analyzed four segregated institutional mandates but found these to be “closely overseen by the client through regular reporting and meetings with the asset manager.”

No specific asset managers were named in the FCA’s report, but firms exercising poor practice will be contacted by the regulator and “required to make improvements.”

The “meeting investors’ expectations” thematic review forms part of a wide-ranging asset management market study, in which the FCA aims to review all parts of the distribution chain including asset managers and consultants.