Global Tactical Asset Allocation
as of March 31, 2013
Fund Commentary
Diverging economic and market outcomes in the first quarter signaled the recovery had likely entered a new stage. Evidence that the Federal Reserve’s early and aggressive monetary actions had moved beyond boosting financial assets to supporting genuine rebounds in housing and hiring produced a strong U.S. equity rally. In contrast, growth in emerging economies was decent but below expectations, sending these equities lower. Other developed economies that had been slow to copy the Fed’s strategies — or teamed them with fiscal austerity — saw rising unemployment and lagging equity returns. After accepting in recent years that collective monetary easing could diminish most global threats to financial stability, investors started to bridge back into a world where fundamentals matter. In this environment, U.S. equities were the period’s best-performing asset class, followed by global real estate investment trusts (REITs), developed non-U.S. equities and high yield bonds. Other fixed income sectors were flat, and returns were negative for natural resources, emerging equities and gold, which continued to lose its safe-haven status.

The Global Tactical Asset Allocation Fund posted a total return of 3.76% for the quarter, compared with 3.84% for the Fund’s blended static benchmark. During the quarter, we eliminated the Fund’s gold position and shifted the proceeds into Treasury inflation-protected securities (TIPS). This modestly reduced overall risk exposure and helped drive the quarter’s results.

The Fund’s asset composition anticipates gradually firming and broadening expansions in the U.S. and emerging regions, lingering weakness and economic deleveraging in Europe and open-ended monetary accommodation from global central banks.

Investor Profile

For those long-term investors looking to diversify your investment among various asset classes (stocks, bonds, commodities, and other) both domestic and foreign, then this Fund may be right for you.

Philosophy
  • Diversify among various asset classes (stocks, bonds, commodities, and other) both domestic and foreign. The allocation will be based on an asset allocation framework developed by the Investment Policy Committee of The Northern Trust Company (TNTC) and Northern Trust Investments, Inc (NTI).
  • Invest significantly in funds that invest in companies that are located outside of the U.S. as represented in either the MSCI EAFE® Index, MSCI Emerging Markets Index or other diversified foreign indices.
  • Monitor the current asset allocation framework regularly to ensure the allocation is aligned with evolving investment views amid changing market and economic conditions.
 
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** for the four months ended 3-31-12, the annual portfolio turnover ratio for the year ended 11-30-11 was 76.63%.