Boston-based asset manager Northern Cross has closed its doors and announced plans to enter liquidation just four months after it was dropped as subadvisor on the Harbor International fund following a period of underperformance and outflows.
A notice on the company’s website said the firm has ‘terminated all business operations and transferred all of its assets and liabilities to NC Liquidation Trust.’
The transfers of assets and liabilities occurred on December 28, 2018.
The closure of the firm marks a rapid decline, coming just four months after Northern Cross was dropped as the sole subadvisor on the Harbor International fund. At the time of the termination that fund had $20.8 billion in assets under management and represented the vast majority of Northern Cross’s AUM, which had stood at $25.3 billion at the end of June 2018.
Launched in 1987, the fund had been co-managed by Northern Cross's Howard Appleby, Jean-Francois Ducrest and James J. LaTorre since 2009.
The firm was axed from the fund following what Harbor referred to as ‘a sustained period of underperformance.’
The fund had lagged its benchmark, the MSCI EAFE NR, in every calendar year from 2013 to 2017, according to Lipper data, although was ahead for the year at the time of the termination. Northern Cross was replaced as subadvisor by London-based Marathon Asset Management LLP.
The fund had also experienced outflows with investors pulling money in every quarter from the last three months of 2014 onward. In total, over that time to the end of Q2 2018, the fund suffered net outflows of $28.9 billion, according to data from Lipper.
Following the loss of this mandate, Northern Cross was then dropped as subadvisor on Litman Gregory Masters International fund. Its 20% sleeve of this fund was split among the remaining subadvisors: Evermore Global Advisors, Harris Associates LP, Lazard Asset Management, Pictet Asset Management and Thornburg Investment Management.
At the time of that announcement, the Litman Gregory Masters International fund had $466.2 million in assets under management.
Citywire understands that Litman Gregory did not fire Northern Cross due to concerns over investment performance, but because it deemed the business risk to be too high following the firm's loss of the Harbor mandate.
In the aftermath of being dropped from the Harbor fund, Northern Cross filed documents with the Securities and Exchange Commission to launch its own 40 Act mutual fund, to be called the Northern Cross International fund, to be run by the same management team as had been on the Harbor fund.
However, this plan would appear to have been scrapped as the notice on the Northern Cross site said: ‘None of the company, NC Liquidation Trust or any of the company's members or associated persons will continue any portion of the company's business activities, or make use of the company's name, investment track record or goodwill, other than as may be required to effect the liquidation of the company.’
The company could not be contacted for comment at the time of publication.