Northern Trust was selected to provide global custody and related services including foreign exchange, cash management and brokerage, for Equinox Partners, LP, a global long/short equity fund manager with approximately $1.3 billion in assets under management.
New York-based Equinox Partners invests in undervalued companies with strong managements that generate superior returns on capital, and shorts securities that offer an attractive risk reward. Under the agreement with Northern Trust, the fully paid-for assets of Equinox Partners are held in a global custody account, while assets for alternative investment strategies are maintained at prime brokers, including Northern Trust Securities, Inc. Through a solution provided by Northern Trust’s Global Fund Services unit, Equinox receives a single report which includes performance figures and other metrics for assets held at Northern Trust and in sub-custody accounts at the prime brokers.
“Historically, we have relied on prime brokers to custody our fully paid-for securities,” says Brian J. Tsai, chief operating officer for Equinox. “By appointing Northern Trust as our global custodian, we’ve been able to transfer our un-levered assets into a more appropriate account, thus separating custodial and prime brokerage services in a way that minimizes our fund’s counterparty risk.”
“This decision by Equinox Partners reflects an emerging trend of investment managers seeking to avoid additional risk by employing a third-party custodian,” says Peter Reinhart, senior vice president for Northern Trust’s Global Fund Services. “We believe this trend will continue as market volatility persists and firms look for new ways to manage risk where they can.”