CHICAGO - Northern Trust Co. paid First Chicago Corp. $50 million in cash for its ANB Investment Management Co. unit in closing its purchase of the index fund manager, a sign most clients are accepting the change.
The price, first announced with the proposed deal in October, had been tentative depending on clients remaining.
"We retained almost every client," said Stephen N. Potter, senior vice president and director-institutional client services.
ANB has $28 billion under management, almost all for tax-exempt clients and all but $1 billion in index investments.
The manager will operate as Northern Trust Quantitative Advisors Inc. Northern Trust will assign all its existing $11 billion in passive investments to NTQA. In all, NTQA will have close to $40 billion under management.
Northern Trust's existing active investments will be managed as they have been. Northern Trust active management could one day move to NTQA, but there are no plans to do so now, Mr. Potter said.
Aside from its passive investments, Northern Trust placed in NTQA its structured equity activities, including transition management in which a fund sponsor replaces one manager with another; portfolio hedging, including portfolio insurance and collars, which allow clients to pay for portfolio protection on the downside by giving up potential gain on the upside.
Among key people at NTQA:
John R. Goodwin will be chief investment officer-passive management. He was head of Northern Trust's structured equities group, which included indexing, manager transition and hedging.
James M. Snyder will be chairman in addition to continuing as chief investment officer of Northern Trust. Mr. Goodwin will report to him.
Mr. Potter, whose duties include client services and marketing for both NTQA and money management arm Northern Trust Global Investments, where he is a director.
Jeffrey H. Wessel will be president and head of institutional investment services, including securities lending and risk management. Mr. Potter will report to him.
Neil R. Wright will be chief investment officer-active products, managing $1 billion, all of which will come from ANB. He was head of active equities at ANB. He reports to Mr. Snyder.
Kristen R. Hart will be director of passive fixed income. She was director of passive portfolio management, equities and fixed income, at ANB. She will report to Mr. Goodwin. NTQA will combine ANB's $8 billion of passive fixed income and Northern Trust's $1 billion of passive fixed income.
Judy M. Bednar will be director of passive equity. She will report to Mr. Goodwin.
James J. Barrett will be director of client services and head of national sales. He will report to Mr. Potter.
Sandra M. Gurgone will be manager of client services. She will report to Mr. Potter.
In all, ANB had 180 clients. Thirty were already Northern Trust clients.
Mr. Potter said NTQA is considering converting eight passive ANB funds to daily valuation from monthly for the 401(k) market. No decision has been made, although Mr. Potter said the funds will remain as collective trusts rather than be changed to mutual funds. All ANB products were valued monthly, while some of Northern Trust's passive funds were valued daily.
For the 401(k) market, the new group also hopes to build lifecycle funds using its index funds and develop employee investment communications using the Internet.
