Northern Trust Conference Call Summary Company Overview - **Company**: Northern Trust (NasdaqGS:NTRS) - **Industry**: Asset Management and Wealth Management - **Key Executives**: David Fox (CFO), Michael Hunstad (President of Northern Trust Asset Management) Key Points Asset Management Business - Northern Trust is a significant player in the asset management industry, with **$1.4 trillion** in total assets under management, and **$18 trillion** in assets under custody, placing it in the "trillion-dollar club" of asset managers [2][3] - The company has a diverse asset management portfolio, with **40%** of assets in active management, including a robust alternatives business under the brand **50 South Capital** [3][4] - Northern Trust is recognized as one of the top three tax-advantaged equity firms globally, with a **35-year track record** [4] - The firm has a strong technology stack, leveraging AI and alternative data in its investment strategies, including a **$50 billion** quantitative strategies business [4][17] Growth Strategies - Northern Trust plans to focus on growth areas such as **ETFs**, alternatives, and custom SMAs, with expectations of **double-digit growth** in these segments [9][10] - The company launched **11 new ETFs** in 2025, including innovative products aimed at providing cash flow streams without locking assets [10] - The firm has seen significant fundraising growth in alternatives, increasing by **2.5 times year-over-year** [10] Innovation and Technology - Northern Trust emphasizes the importance of innovation and speed in product launches, having restructured its ETF platform to enhance responsiveness [13][14] - The company has invested in AI capabilities, rolling out tools like **Copilot** for employees to enhance productivity and efficiency [40][41] - AI is being utilized for various applications, including document digitization and client prospecting, with a backlog of **150 use cases** identified [40][41] Financial Performance and Outlook - Northern Trust has set medium-term targets for profitability, aiming for a **33% pre-tax margin** and focusing on a business mix that favors wealth and asset management [28][29] - The company is positioned to benefit from a higher interest rate environment, with strategies in place to manage deposit pricing and asset repricing effectively [30][32] - The firm is cautious about potential risks to net interest income (NII), primarily focusing on business growth and deposit stability [35] Strategic Priorities - The creation of a COO function has centralized best practices and improved operational efficiency, contributing to growth and productivity [20][21] - Northern Trust is focusing on expanding its family office solutions, targeting high-net-worth individuals and replicating successful models in key markets [51][52] - The company is exploring inorganic growth opportunities, particularly in asset management and wealth, while maintaining a disciplined approach to acquisitions [64][65] Tokenization and Market Trends - Northern Trust has launched its first tokenized share class for a treasury-only fund, responding to client demand for more tradable and collateralizable assets [48][49] - The firm is building infrastructure to accommodate tokenized assets, ensuring it remains competitive in the evolving market landscape [50] International Growth - Northern Trust is expanding its presence in Europe and the Middle East, leveraging its asset servicing capabilities for family office clients [59] - The company has established an office in Singapore to capture opportunities in the Asian market, although family office growth there is still developing [60] Conclusion Northern Trust is strategically positioned for growth in the asset management and wealth management sectors, leveraging its strong technology, innovative product offerings, and a focus on high-growth areas. The company is committed to enhancing its operational efficiency and expanding its market presence both domestically and internationally.