Global Tactical Asset Allocation
as of December 31, 2013
Fund Commentary
Financial markets crossed several noteworthy thresholds in 2013's fourth quarter. Among them was the realignment of market behavior with fundamental factors, or back to where equities typically rally on good economic news. In this vein, favorable growth and hiring trends in the U.S., coupled with a return to economic stability in the eurozone, sent stock indices to new records and brightened the outlook for 2014. Not coincidentally, the Federal Reserve announced it would begin to scale back monetary stimulus in January and for many this signaled the end of the financial crisis. Meanwhile, the quarter's divergent asset class results highlighted the rebirth of fundamentally driven financial markets. Against a backdrop of improving economic activity, risk-focused assets performed strongly, while risk control assets posted flat to negative results. U.S. equities were the best-performing asset class, followed by non-U.S. developed market equities, natural resources, emerging equities and high yield. Investment-grade fixed income returns were flat, while Treasury Inflation-Protected Securities (TIPs) and global real estate investment (REITs) declined.

The Global Tactical Asset Allocation Fund posted a total return of 4.67% for the quarter, compared with 4.30% for the Fund's blended static benchmark. The Fund's outperformance was driven by consistent overweight positions to risk assets, especially U.S. and other developed region equities, and underweights to fixed income and cash.

The Fund's current positioning anticipates that growth in developed world Gross Domestic Product (GDP) in 2014 will successfully replace central bank stimulus as the primary driver of financial asset returns.
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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