NORTHERN EXPOSURE: TRUST GIANT LAUNCHES FUND MARKETING PUSH: IT’S SAID TO BE IN TALKS WITH CHARLES SCHWAB FOR MART SHELF SPACE

Northern Trust Co. hopes to jump-start sales of its mutual funds nationwide with a marketing push that plays off its strong reputation among Chicago banking customers.

The branding campaign, masterminded by Stephen Timbers, president of the bank’s recently formed Northern Trust Global Investments, aims to boost Northern’s assets — and its profile — in a field teeming with competitors.

The move breaks with tradition at Northern, which never has advertised its 40 mutual funds, nor aggressively marketed its investment management services to customers beyond the bank’s traditional trust and custody client base.

A CHANGE IN DIRECTION

The bank’s 17 institutional and 23 retail mutual funds boasted yearend 1998 assets of $20.9 billion, a 31% increase from 1997.

Mr. Timbers, 54, is banking on a vigorous retail strategy — capitalizing on Northern’s trustworthy image — to spur similar asset growth in 1999. “Northern Trust is a very strong brand with large brand equity,” he says. “We’re trying to expand that (Northern) brand to mean quality investment services.”

Among Northern’s initiatives:

* Negotiating with a top discount brokerage, reportedly Charles Schwab & Co., to market Northern Funds in a supermarket of leading mutual funds.

* Acquiring an investment manager with $3 billion to $5 billion in assets that specializes in value stocks to offset the bias toward growth stock funds in Northern’s portfolio.

* Displaying “Northern” prominently in the funds’ names to heighten brand awareness. For example, the bank’s 17 institutional funds, formerly dubbed Benchmark Funds, were renamed Northern Institutional Funds last year.

* Rolling out three new fixed-income funds as well as a small-cap index fund later this year. In another break with tradition, Northern launched its first two junk bond funds in January.

* Launching a $500,000 print ad campaign to tout top performers such as its Technology Fund, which has tallied a 45.95% annualized return since its 1996 inception.

Inquiries to Northern’s call center have nearly tripled to more than 21,000 per month since the bank began running newspaper ads in five states stressing themes like trust and quality. But the bank isn’t likely to launch a similar TV push, Mr. Timbers concedes.

Without it, Northern will find it difficult to make sizable inroads with consumers already inundated with commercials from larger, better-known competitors.

What’s more, Northern remains a relatively minor player compared with other mutual fund giants.

“The funds have had some decent inflows,” says Russ Kinnel, technical fund analyst with Morningstar Inc., the Chicago-based mutual fund rating agency. “Their performance is respectable. But, obviously, they’re still a small player in the fund world.”

Results are solid for the three Northern funds rated by Morningstar, and its Technology Fund should fare well when it receives a star rating next month. The bank’s $180-million Select Equity Fund snared four stars, while its Growth Equity and Small Cap funds each garnered three stars.

Northern’s retail strategy is part of a broader effort by Mr. Timbers to create a new client base and cross-sell within Northern Trust Global Investments, the bank’s $234-billion-asset group that encompasses mutual funds, risk management and other investment services.

Northern Trust Chairman and CEO William Osborn last year hired Mr. Timbers, who formerly headed Chicago-based Zurich Kemper Investments Inc., to coordinate the bank’s investment activities, which were scattered between its personal financial services and corporate and institutional services groups.

“The move was overdue,” says James Schutz, analyst with Chicago investment bank ABN Amro Inc. “It quietly has become a very important part of their business.”

The bank doesn’t break down profit and loss results for Mr. Timbers’s group. However, assets under management grew 20% in 1998, a pace Mr. Timbers expects to maintain in 1999. But the money managers should prove valuable in intangible ways, for example, as a tool to attract and retain private banking clients, Mr. Schutz notes.

“There’s a thought that banks can’t run money,” says Mr. Timbers. “Here’s an institution where it’s a key element to the future.”

Crain News Service