In the final quarter of 2025, the Northern Trust Active M International Equity Fund experienced a period of underperformance, falling short of its benchmark, the MSCI World ex U.S. IM Index. This occurred despite a robust showing from non-U.S. developed markets generally. The fund's strategic overweights in communication services and aerospace/defense, sectors that did not meet expectations, coupled with less-than-optimal stock choices in consumer discretionary, were key factors in this outcome. Nevertheless, the contributions from value-focused sub-advisers, notably Causeway and Wellington, through their astute stock selections in the financial sector, provided a positive counterpoint to the quarter's results.
Northern Trust's International Equity Fund: A Deep Dive into Q4 2025 Performance
In the fourth quarter of 2025, the Northern Trust Active M International Equity Fund encountered a period of underperformance relative to its designated benchmark, the MSCI World ex U.S. IM Index. This occurred despite an otherwise strong rally in non-U.S. developed markets during the same period. Key contributors to the fund's lagging returns were its strategic overweight allocations to the communication services and aerospace/defense sectors, both of which experienced a downturn in performance. Additionally, stock selection within the consumer discretionary sector proved to be a drag on overall results. Conversely, two of the fund's value-oriented sub-advisers, Causeway and Wellington, showcased commendable expertise through their strong stock-picking abilities, particularly within the resilient financials sector. Their contributions helped mitigate some of the broader underperformance seen in other areas of the portfolio.
This quarter's performance underscores the inherent complexities and dynamic nature of global equity markets. It highlights that while broad market trends can be favorable, specific sector allocations and individual stock selections remain critical determinants of fund performance. For investors, this serves as a reminder of the importance of diversification and the value of skilled asset management in navigating market fluctuations. The positive contributions from certain sub-advisers also illustrate the benefit of a multi-manager approach, where diverse strategies can collectively contribute to long-term objectives, even when some components face short-term headwinds.