Goldman Sachs’ List Of Stocks Popular With Mutual Fund Managers: Top 20 Stocks

4. Northern Trust Corporation (NASDAQ:NTRS)

Number of  Mutual Funds: 25

Number of Hedge Fund Investors in Q2 2024: 33

Northern Trust Corporation (NASDAQ:NTRS) is a financial services company headquartered in Chicago, Illinois. The firm provides services such as wealth, investment, cash, and treasury management. Out of its $4.3 billion in interest and noninterest income in H1 2024, $2.3 billion or 53% came through trust, investment, and other fees. This is a key factor for Northern Trust Corporation (NASDAQ:NTRS)’s hypothesis, since it reduces the exposure that the bank has to interest rates when earning revenue. It also means that the bank can see a stable flow of funds even when interest rates are high and money typically moves to money market funds. Between December 2023 and June 2024, Northern Trust Corporation (NASDAQ:NTRS)’s assets under management and assets under custody grew by 6% to sit at $1.5 trillion and 9% to sit at $13 trillion. However, high interest rates have also made their mark. The bank’s H1 2024 interest income and interest expense sat at $4.9 billion and $3.9 billion, respectively. Over the year ago figures, these marked growths of 56% and 77%, respectively. This meant that interest income growth was outpaced by expenses, and as rates lower, Northern Trust Corporation (NASDAQ:NTRS) could see additional tailwinds. However, the bank might not be completely out of the woods as its interest income is also dependent on a large extent to floating rate assets.

Northern Trust Corporation (NASDAQ:NTRS)’s management shared details about its approach to shifting rates during the Q2 2024 earnings call:

“Oh, yes, the due from banks, and we can come back to you. I think that’s just noise in the reporting on a small denominator. But in general, on the betas, the — I mean, you saw the ECB reduction, we got effectively 100% beta on that. And so we’ve — at this point with rates at these levels, the betas are going to be very high. And so we — in that example, both the standard rate card and the negotiated rates both came down in conjunction with the Central Bank change and even the negotiated rates tend to be on a spread to Central Bank rates. And so we feel like, again, in this zone of where rates are, the spread shouldn’t change material.”