Northern Trust's Strategic Expansion in Asset Servicing and Its Implications for Institutional Investors

In 2025, the global institutional investment landscape is undergoing a profound transformation, driven by shifting priorities in asset allocation, regulatory complexity, and the urgent need for scalable solutions in alternative markets. At the forefront of this evolution is Northern Trust, whose strategic expansion in asset servicing—particularly through enhanced fund administration and custody solutions—is enabling alternative asset managers like Gravis Advisory Limited to scale efficiently in the UK's infrastructure and real estate sectors. This partnership not only underscores the growing importance of alternative assets but also highlights how institutional investors can leverage tailored operational frameworks to navigate macroeconomic and regulatory headwinds.

The Rise of Alternative Assets and the Role of Northern Trust

Northern Trust's 2025 Global Asset Owner Peer Study reveals a seismic shift in institutional investor behavior. Of 180 surveyed asset owners managing portfolios ranging from $1 billion to $500 billion, 86% now allocate to private markets, with real estate and private credit emerging as key components. The average portfolio now includes 13% in private assets, up from 9% in 2023, as liquidity management becomes a top priority. With 60% of respondents citing increased importance for liquidity and 11% of portfolios held in cash, the demand for operational efficiency and risk mitigation has never been higher.

Northern Trust's fund administration and custody solutions are uniquely positioned to address these needs. By offering customizable services—from fund structuring and compliance to global custody and investor relations—the firm enables managers like Gravis to streamline operations while adhering to evolving regulatory standards. For instance, the European T+1 securities settlement transition, set to take effect in 2025, requires firms to adopt advanced trade lifecycle management. Northern Trust's technology-driven infrastructure, including automated trade matching and unique trade identifier (UTI) systems, ensures seamless compliance, reducing operational friction for managers focused on UK infrastructure and real estate.

Gravis's Strategic Play in the UK Real Estate Market

Gravis Advisory Limited has capitalized on Northern Trust's capabilities to scale its UK real estate and infrastructure strategies, particularly in the listed property sector. The firm's VT Gravis UK Listed Property (PAIF) Fund, which returned 12.3% year-to-date as of May 2025, exemplifies this success. The fund's outperformance—7.8% YTD for the broader UK REIT sector—stems from a combination of undervalued assets and strategic positioning.

A key driver is the sector's persistent valuation discounts. As of April 2025, UK REITs trade at an average 26.9% discount to net asset value (NAV), significantly above the 10-year average of 17.5%. Historical data suggests that such discounts often precede strong returns: 95% of cases where REITs were purchased at a 30%+ discount delivered positive one-year returns, with two-year gains exceeding 50% in 60% of instances. Gravis's focus on high-quality REITs with robust development pipelines—such as Empiric and PRS REIT—has amplified this potential, leveraging Northern Trust's custody and accounting services to manage complex valuations and liquidity requirements.

Enabling Intergenerational Wealth Transfer and Infrastructure Growth

Beyond listed property, Northern Trust and Gravis have collaborated on innovative structures to facilitate intergenerational wealth transfer and infrastructure investment. A notable case study involves a family transferring a 50% stake in a commercial retail property in Austin, Texas, through a fractional interest discount and intra-family loan. By leveraging Northern Trust's real estate advisory services, the older generation avoided gift tax consequences while enabling the younger generation to acquire the asset at a low cost. This model, which preserved family relationships and optimized tax efficiency, highlights how institutional-grade solutions can be adapted to private wealth management.

In the UK infrastructure space, Gravis's focus on decarbonization and digital transformation aligns with Northern Trust's global custody expertise. The firm's ability to manage cross-border infrastructure portfolios—spanning renewable energy, transport, and smart city projects—has been bolstered by Northern Trust's regulatory and tax administration services. As the UK government accelerates its net-zero agenda, institutional investors are increasingly allocating to infrastructure, with JPMorgan forecasting a 7.5% annual growth rate for core real estate over the next decade.

Strategic Implications for Institutional Investors

For institutional investors, the Northern Trust-Gravis partnership offers a blueprint for navigating the complexities of alternative assets. Three key takeaways emerge:

1. Operational Resilience Through Technology: Northern Trust's automation of trade settlement, compliance, and reporting reduces manual interventions, critical for managing the illiquidity of real estate and infrastructure.
2. Regulatory Agility: As T+1 and other reforms reshape markets, firms must adopt solutions that future-proof their operations. Northern Trust's global custody and compliance frameworks provide this agility.
3. Access to Undervalued Opportunities: The UK REIT sector's valuation discounts and infrastructure's long-term growth potential present compelling entry points, particularly for investors seeking yield and inflation protection.

Conclusion: A New Era for Alternative Asset Management

Northern Trust's strategic expansion in asset servicing is not merely a response to market trends but a catalyst for institutional investors seeking to capitalize on the UK's real estate and infrastructure renaissance. By partnering with firms like Gravis, the firm is enabling a new era of scalable, compliant, and technology-driven alternative asset management. For investors, the message is clear: those who integrate these capabilities into their strategies will be better positioned to navigate the volatility of 2025 and beyond.

As the UK's infrastructure and real estate markets continue to evolve, the synergy between Northern Trust's operational expertise and Gravis's market insights offers a compelling model for institutional investors. The question is no longer whether to allocate to alternatives but how to do so with the precision and resilience required in today's dynamic environment.