Our interaction with our clients is personalized and consultative. Each client is assigned a primary point of contact and is supported by a team of multi-disciplinary specialists that leverage decades of collective experience in fixed income portfolio management, strategies, research and trading.
Under the direction of our Chief Investment Officer, our teams work closely with advisors to identify and quantify portfolio strategy characteristics, advisor-defined objectives and parameters. From this framework, we build a rigorous and repeatable investment process that ensures investors’ assets are managed in line with our clients' expectations. We implement a highly disciplined methodology that employs complex processes. Through systematic computation we produce simple, logical results that enable us to deliver flexible portfolio solutions precisely designed to meet advisor-defined objectives.
At the heart of modern portfolio theory is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk. Northern Capital partners with advisors to establish this mathematical framework in the form of advisor-defined portfolio strategies.
We partner with advisors to develop, implement, and maintain custom portfolio strategies using both taxable and tax-exempt individual bonds. Through an iterative process, we quantify advisor-defined portfolio constraints such as duration, maturity distribution and sector allocation. Using quantitative horizon analysis, portfolio structures can be optimized to perform in a wide range of possible future interest rate scenarios.
In contrast to purchasing an assortment of bonds from an electronic trading platform, or buying the bond-of-the-day from a traditional bond broker, we believe that a standardized mathematical framework of advisor-defined strategies will produce optimal portfolio structures where individual bonds complement one another and can contribute significantly to delivering predictable and repeatable outcomes.
Since the global financial crisis, the bond market has become bigger, more fragmented and less liquid. Wirehouses are now committing less capital to trading and have significantly reduced inventories due to several factors including Dodd Frank, the Volcker Rule and Basel III.
In response, Northern Capital has developed proprietary technologies that augment our ability to source bonds from the broad aggregate market, where pricing efficiencies are maximized. We source bonds from a combination of Alternative Trading Systems (ATSs) and Electronic Communication Networks (ECNs). In addition, we have developed hundreds of counterparty dealer relationships over the past two decades. Built on many years of trust, they remain a vital source of bonds and liquidity. Combined, this approach forms a deep and wide representation of the overall market, ideal for sourcing bonds.
Using our quantitative selection metrics technology and qualitative analysis, we screen this broad aggregate of bonds to precisely match advisor-defined strategies and to further our goal of identifying optimal pricing across the broadest possible aggregate market.
Northern Capital's portfolio optimization process is a blend of leading-edge quantitative analysis and experienced qualitative insights. Our process is designed to produce predictable, scalable, repeatable results that precisely match advisor-defined portfolio strategy characteristics.
Beginning with the advisor-defined quantitative strategy framework, our portfolio optimization analytics are driven by powerful algorithms that systematically solve for portfolio constraint attributions, portfolio strategy characteristics and optimal pricing using live investable securities data. This highly-scalable systematic approach is used to guide us in the process of portfolio construction, ongoing portfolio analysis and periodic rebalancing.
These leading-edge technologies are applied by our experienced, multi-disciplinary specialists. They leverage decades of collective experience in fixed income portfolio management, strategies, research and trading. We believe the integration of these quantitative and qualitative approaches complement one another and improve decision making by ensuring that the limitations of one type of analysis are balanced by the strengths of another.
Portfolio management reporting can have a transformational impact on an organization. Possessing timely portfolio reporting capabilities enhances the ability to make, and document, evidenced-based investment management decisions. Northern Capital has aligned its information and reporting capabilities with advisors' need for specialized content necessary to support fixed income portfolio management.
Northern Capital has developed and refined a host of private-label portfolio management reports. These reports are designed to increase productivity, provide relevant analysis through sophisticated and innovative analytics, improve collaboration and to support and document decision making.
Standard reports include portfolio analysis reports, portfolio proposals, portfolio alerts, maturity and cash-flow schedules, sector analysis, assessment of hypothetical changes to holdings, advisor-defined portfolio strategy summaries and portfolio rebalancing. Northern Capital's private-label portfolio reporting capabilities help advisors reinforce their brand and their position in the marketplace as industry experts.
We believe that a standardized mathematical framework of advisor-defined strategies will produce optimal portfolio structures and can contribute significantly to delivering predictable and repeatable outcomes.
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