"I'll push. You pull."
We know from everyday experience that good things can happen when talented people pool their efforts.
For the Northern Multi-Manager Large Cap Fund, one of those "good things" might be the dampened volatility that could result from using four sub-advisers, each employing a different approach.
"We believe that coming at the market from several strategic directions may reduce volatility while also providing an attractive combination of risk and return," said Jessica Hart, the Fund's co-portfolio manager.
After several topsy-turvy years in world markets, this type of approach has rarely looked so appealing.
Like all of Northern Funds' seven multi-manager funds, the Northern Multi-Manager Large Cap Fund employs specialist sub-advisers from major investment style categories that are designed to complement each other. This Fund combines four investment styles: aggressive growth, conservative growth, deep value and opportunistic value.
The idea is to avoid putting all the Fund's "eggs" in a single managerial basket.
"No one can predict when an investment style will go in or out of favor," Hart said, "and it's often counter-productive to try."
All together now
As you'd expect, the Fund's four sub-advisers were not picked randomly out of a hat.
"It is a painstaking process that involves finding an acceptable combination of risk and return," Hart said. "Our investment strategy aims to provide attractive returns while also giving our shareholders a smoother ride."
Hart dismisses concerns that large capitalization stocks are too widely scrutinized for active managers to add much value.
"That's not been our experience," she said. "Obviously, past performance doesn't guarantee future performance, but the Northern Multi-Manager Large Cap Fund has done well since inception."
Notably, Hart said the Fund's results so far have been consistent and spread among the four sub-advisers.
"It's not been a case of one manager shooting the lights out and the other three coming along for the ride," she said. "Our focus on hiring specialist managers with strong stock-picking skills from different disciplines has worked just as we intended."
Good to be different
Hart stresses that employing four managers does not turn the Fund into a closet index offering.
"Our benchmark is comprised of 1,000 stocks," Hart said, referring to the Russell 1000 Index. "The Northern Multi-Manager Large Cap Fund currently owns less than 20% of those, and in different amounts."
After all, we don't believe you have the chance to beat the market if you are the market.
Past performance is no guarantee of future performance. There is no guarantee the funds' investment objectives and strategies will be met. Holdings are subject to change.
Diversification does not guarantee a profit nor protect against a loss.
Equity Risk: Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The net asset value per share of this Fund will fluctuate as the value of the securities in the portfolio changes.