The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Credit-Scored US Corporate Bond IndexTM (Underlying Index).
1. Identify a liquid universe of bonds with maturities from 2 to 10 years
2. Assess the current financial state of US issuers based on a proprietary credit score model
3. Optimize exposure to the credit score while maintaining market like duration and spread
Predictable income generation is an essential pursuit as investors strive to meet financial obligations and achieve long-term goals. But each investor’s outcome is affected by individual factors like the stage of his or her lifecycle (i.e., accumulation versus retirement), plus macro factors like the rate of inflation or disinflation. Traditionally, income has been generated from variable sources like interest payments, dividends and capital gains, as well as guaranteed sources like annuities. Yet, traditional income sources have become less predictable as financial markets have become more global and dynamic. The following income generation solutions may complement investors’ portfolios by seeking to provide targeted and innovative sources of income to respond to dynamic market factors.
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The Northern Trust Credit-Scored US Corporate Bond Index is designed to measure the performance of a diversified universe of intermediate maturity, U.S.-dollar denominated bonds of companies with investment grade-like characteristics, and enhanced short-term and long-term solvency. To promote liquidity, securities must have an effective maturity of 2-10 years and at least $500mm in amount outstanding to be eligible for inclusion. The index’s construction utilizes an optimization process which has primary objectives of maximizing exposure to our proprietary credit-score, while also maintaining an option adjusted spread and effective duration similar to the eligible universe. The proprietary credit-score seeks to identify companies that exhibit strength in management efficiency, profitability, and solvency.