Northern Trust Asset Management Launches Two Climate-Focused Multifactor UCITS Funds for EMEA and APAC Investors

Northern Trust Asset Management, a global investment manager with $1.4 trillion in assets under management, has launched two actively managed UCITS funds designed to pursue outperformance while efficiently managing climate transition-related risks and opportunities for institutional and professional investors across Europe, the Middle East, Africa and Asia-Pacific. The NT World Multifactor Focus Select Fund seeks excess returns over a full market cycle while the NT World Multifactor Select Fund aims to deliver long-term capital growth, with both funds employing the firm's proprietary value, quality, momentum and low volatility factor signals combined with financial, alternative and sustainable datasets. The funds integrate targeted reductions in carbon footprint and assessment of industry-specific climate risks and opportunities into the security selection process while preserving factor content, alongside active engagement and proxy voting to encourage ESG practices and disclosures among investee companies.

 

The Investment Methodology and Factor Integration

 

Northern Trust Asset Management's quantitative investment team has built factor-based investing capabilities over three decades, managing $47 billion in quantitative strategies across equities and fixed income as of March 2026. The two new funds deploy this established expertise through a multi-faceted portfolio construction approach that simultaneously manages alpha generation, investment risks, climate risks and costs, with continuous evolution of sustainable datasets and signals across research, data science, sustainable investment and portfolio management teams. Guido Baltussen, Global Head of Quant Strategies at Northern Trust Asset Management, said the fund strategies combine the quantitative team's deep factor-based investing experience with proprietary research into the integration of meaningful decarbonisation and other climate-related criteria, describing continuous dataset review as essential for delivering optimal investment and sustainability outcomes.

The four-factor framework of value, quality, momentum and low volatility has a well-established empirical basis in equity markets and provides a systematic and replicable source of excess returns that institutional investors understand and can evaluate against conventional benchmarks. Integrating carbon footprint reduction and climate risk assessment directly into this framework, rather than applying them as post-construction overlays or exclusion screens, is a more technically demanding approach that requires the quantitative research team to demonstrate that climate considerations can be embedded without materially degrading factor exposures. The use of alternative and sustainable datasets alongside conventional financial data reflects the growing availability of environmental data in machine-readable formats that can be incorporated into systematic investment processes at the security selection stage.

 

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Climate Risk Integration and Engagement Approach

 

The funds' integration of climate transition-related risks and opportunities addresses both the physical risks of climate change to business models and assets and the transition risks arising from policy, technology and market changes as economies decarbonise. Industry-specific climate risk assessment is particularly important for multifactor strategies investing across sectors with very different carbon intensity profiles, regulatory exposures and competitive dynamics in a transitioning economy, where a uniform carbon screening would miss the nuanced differences between companies within the same sector at different stages of transition credibility. Pedro Guazo, Head of International and Global Head of Responsible Investing at Northern Trust Asset Management, said the climate transition remains a critical theme for investors both in terms of mitigating associated portfolio risks and considering opportunities to support credible transition plans and climate solutions.

Beyond portfolio construction, the funds employ active engagement and proxy voting to encourage ESG practices and disclosures among investee companies, adding a stewardship dimension to the quantitative investment approach. This engagement capability reflects the growing expectation from institutional investors across EMEA and APAC that asset managers take active ownership responsibilities alongside managing financial risks, rather than simply expressing sustainability preferences through portfolio tilts. The combination of systematic carbon footprint targeting, climate risk integration and active engagement creates a more comprehensive climate investment framework than strategies relying on any single mechanism, addressing the different time horizons over which portfolio construction decisions and engagement outcomes operate.

 

Competitive Positioning in Sustainable Quantitative Equity

 

The launch of the two multifactor UCITS funds positions Northern Trust Asset Management within a competitive and growing segment of the institutional equity market where multiple large quantitative managers have developed climate-integrated factor strategies for European and Asian institutional investors. The UCITS structure provides regulatory compatibility and operational familiarity for institutional investors across EMEA and APAC, enabling distribution through the established infrastructure of European fund platforms without requiring bespoke segregated mandates for each client. The funds are designed for institutional, professional and wholesale clients rather than retail investors, reflecting the sophisticated investment rationale that underpins the climate-integrated multifactor approach and the minimum investment scale that makes the strategy economically viable.

Differentiating the Northern Trust offering from competitors in the sustainable quantitative equity space will depend on the demonstrated quality of the firm's proprietary factor signals, the sophistication of its climate data integration and the transparency with which it can demonstrate carbon footprint outcomes and factor exposure maintenance simultaneously. Institutional investors evaluating these funds will scrutinise both financial and sustainability performance track records as they develop, assessing whether the climate integration genuinely adds value relative to conventional factor strategies or simply introduces tracking error relative to both the financial benchmark and the sustainability objectives. Sustained delivery of both factor returns and meaningful carbon footprint reduction would strengthen Northern Trust Asset Management's credibility as a leader in climate-integrated quantitative equity and support commercial growth across its target EMEA and APAC institutional client base.

 

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Outlook for Climate-Integrated Quantitative Equity Strategies

 

Whether Northern Trust Asset Management can demonstrate factor efficacy and genuine carbon footprint reduction across full market cycles will be the critical commercial and reputational test for these funds over the coming years. The growing mandatory sustainable finance disclosure requirements across Europe and the expansion of climate reporting expectations in Asia-Pacific are creating structural demand for climate-aware equity strategies that can be clearly articulated in regulatory disclosures and client reporting, providing a favourable backdrop for funds with clearly defined and measurable climate integration methodologies. The convergence of institutional investor climate commitments, regulatory pressure for climate-aware investment approaches and improving environmental data quality creates conditions in which sophisticated climate-integrated quantitative equity strategies are likely to attract increasing allocations from large pension funds, sovereign wealth funds and insurance companies across EMEA and APAC.

Sustained commercial success would reinforce Northern Trust Asset Management's positioning as a leading quantitative manager with credible climate integration capabilities and demonstrate that factor-based return generation and meaningful sustainability outcomes can be pursued simultaneously within a rigorous investment framework. The next phase of sustainable quantitative equity development is likely to be defined by the managers that can combine the most robust empirical evidence of factor performance with the most transparent and measurable approach to climate risk integration, making the track record these funds build over their first three to five years of operation critically important for their long-term commercial trajectories.

 

Source: Northern Trust