ABOUT NISA
NISA is an independent investment
management firm and is registered in the
United States as an investment adviser with
the SEC and as a Commodity Trading
Advisor with the National Futures
Association (“NFA”). NISA is also registered
as a Portfolio Manager in the Canadian
provinces of Ontario, Alberta, British
Columbia, Manitoba, and Quebec, and as a
Commodity Trading Manager in Ontario.
NISA began advising clients in April 1994.
NISA is a wholly owned subsidiary of its
parent company, NISA, LLC, whose ultimate
principal owners and Managers are:
David G. Eichhorn, through Orr
Holdings, Inc., Orr-D, Inc. and Orr-L,
Inc.,
Kenneth L. Lester, through
Ridgewood, Inc., and
Anthony R. Pope, through Shiawase
Holdings, Inc.
NISA is 100% employee owned and as such
we have a long-term view with respect to our
business. We view being privately-held as a
key differentiator and competitive advantage
versus our peers. As such, NISA intends to
remain employee owned. NISA’s
Management Committee, comprised of an
experienced team of senior personnel, is
responsible for overseeing the firm’s
business initiatives and governance.
Since the founding of NISA (including an
ownership transition within the employee
base), we have deliberately sought to align
our culture, systems and incentives in
support of our Mission, Vision and Values.
NISA’s Mission is to “Collaborate with clients
to develop creative and thoughtful
customized investment management
solutions within a team-oriented culture.”
Our Mission is supported by NISA’s Values:
Integrity – Operating with honesty,
transparency, and reliability
Teamwork – Collaborating with
others in a collegial environment
Accountability – Demonstrating an
ownership mindset and taking
personal responsibility
Intellectual Curiosity – Asking
thoughtful questions, striving for
improvement
NISA’s culture seeks to reflect our Mission,
Vision and Values, and we are gratified that
“data” supports our approach. NISA’s
Senior Team, which consists of
approximately 45 team members, average
over 15 years with NISA. The Senior Team
in turn helps align these values throughout
NISA.
The design of our ownership structure is a
prime example of how NISA aligns our
culture with our Mission, Vision and Values.
NISA views our two forms of ownership –
membership in the LLC and participation
interests in the Phantom Ownership Plan –
as key components in building a workforce
that is aligned in delivering results for our
clients. The Phantom Ownership Plan was
designed to promote retention and
incentivize employees with grants of
participation interests at all levels of the
organization. A similar valuation formula is
used to determine the value of LLC interests
and Phantom Ownership Plan interests,
such that participants share in both the
economic upside and downside of NISA.
This design allows NISA and our employees
to take a long-term view and build upon the
Values that are at the core of our culture and
business.
TYPES OF ADVISORY SERVICES
NISA provides investment advisory services
on a fully or partially discretionary basis
primarily to institutional entities and, in
certain circumstances, high-net-worth
investors. Refer to Item 16 – Investment
Discretion for more information about the
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requirements for NISA to accept discretion
for client assets.
INSTITUTIONAL ENTITIES
NISA primarily offers investment
management services to institutional entities
through separately managed accounts. We
also offer several of our strategies to eligible
retirement plan clients through collective
investment funds (“CIFs”) under the NISA
Collective Investment Trust. NISA provides
investment management services to the
CIFs as sub-adviser, and Global Trust
Company (“GTC”) serves as the trustee.
HIGH NET WORTH INVESTORS
Additionally, NISA’s equity strategy is
offered indirectly to high-net-worth investors
through financial intermediaries. NISA does
not offer services directly to high-net-worth
investors. In some cases, NISA provides
discretionary investment advice to such
high-net-worth investors through wrap
and/or managed account programs and
other platforms (“Managed Account
Programs”) sponsored by third-party
investment advisers, banks, or other
financial intermediaries (“Sponsors”). A
client in a Managed Account Program
typically receives discretionary investment
advisory services with respect to their
account assets through one or more
investment advisers (including NISA)
participating in the program, and trade
execution, custodial, performance
monitoring, reporting and other services
through the Sponsor, for a single, all-
inclusive (or “wrap”) fee charged by the
Sponsor based on the value of the client’s
account assets. NISA does not act as a
Sponsor for any Managed Account
Programs. NISA presently participates or
may in the future participate in the following
types of Managed Account Programs:
“Single Contract” programs in which
NISA enters into a contract with a
Sponsor to provide discretionary
advisory services to the Sponsor’s
clients;
“Dual Contract” programs in which
NISA enters into a contract directly
with the client to provide
discretionary advisory services to
the client, and the client enters into
a separate contract with the
Sponsor; and
NISA typically receives a portion of the wrap
fee that clients pay for management of such
accounts. NISA may also pay certain
platform or data analytics fees where
contractually agreed upon with the Sponsor.
If a client receives investment management
services from NISA through a Managed
Account Program, the client should refer to
the wrap brochure provided by the Sponsor
for important information concerning the
program and its fees.
When participating in Managed Account
Programs, the Sponsor is typically
responsible for determining the suitability of
the Managed Account Program, including
NISA and our investment strategy, for the
client. We typically are only responsible for
managing client assets in accordance with
the designated investment strategy. In
certain Managed Account Programs,
Sponsors may limit the information that is
available to us about the client, the client’s
other investments or risk tolerance, and
other information that would be relevant to
determining whether the investment strategy
or certain specific investments would be
suitable for the client. Likewise, we may be
restricted by Sponsors from communicating
directly with clients; all communications,
including communications with respect to
the clients’ investment objectives, financial
condition and reasonable investment
restrictions, typically must be directed
through the Sponsor.
A full list of the wrap programs in which
NISA participates as a Manager are listed in
Section 5.I.2. of NISA’s Form ADV Part 1A.
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OTHER INVESTMENT ADVICE
NISA also provides investment advice other
than discretionary investment advisory
services. This advice is frequently more
general in scope than the advice normally
given in a typical asset management
assignment. Examples of this advice include
asset/liability management, including
glidepath monitoring and de-risking activity,
rebalancing policy, and stable value wrap
selection and administration. Typically, NISA
tailors this advice to the client’s investment
objectives and circumstances. NISA
provides this type of advice on a
discretionary or non-discretionary basis.
The services provided by NISA and all of the
fees to be paid by the client are detailed in
the client’s Investment Management
Agreement, as amended from time to time.
INVESTMENT RESTRICTIONS AND
INVESTMENT GUIDELINE VIOLATIONS
NISA assists each client in developing
investment guidelines tailored to the client’s
specific needs (the “Investment Guidelines”).
The Investment Guidelines generally specify
a benchmark index and limits on the type
and amount of securities held. The client
sometimes specifies limits at the issuer,
industry, rating or other level. NISA will
accept other restrictions if we believe we
can comply with them while still meeting the
client’s objective.
NISA views client acceptance of Investment
Guidelines as the client communicating to
NISA its specific objectives, preferences,
legal requirements, and risk tolerances.
NISA expects that each client, together with
its consultants or other advisors as the client
deems necessary, will independently
approve the Investment Guidelines and
overall investment strategy and objectives
for the portfolio without relying as a principal
basis on NISA.
With respect to the Managed Account
Programs, NISA and the Sponsor may
agree to specific Investment Guidelines for
the applicable strategy. NISA may also
accept restrictions communicated by the
Sponsor consistent with the Investment
Guidelines and strategy objective. The
universe of benchmark indices and
Investment Guidelines available to Managed
Account Program clients will be limited to
investment strategies approved by each
Managed Account Program’s Sponsor.
Certain error definitions are contingent upon
an Investment Guideline term being violated.
Therefore, NISA has an incentive to
negotiate Investment Guidelines with wide
latitude bands in order to reduce the
possibility of committing Investment
Guideline violations or other errors.
NISA uses automated systems and manual
checks to seek to confirm that all client
portfolios are managed in accordance with
their stated objectives and restrictions. A
trade that is inconsistent with a client’s
objectives or restrictions that is detected and
corrected prior to settlement of the trade at
no cost to the client is not considered
an
Investment Guideline violation. In addition, a
passive market move that takes a portfolio
over a limit is also not considered an
Investment Guideline violation.
For Investment Guidelines that apply based
on current market value, to the extent a
client-directed contribution to, or withdrawal
from, a portfolio results in a breach of a
guideline, NISA will trade to move the
portfolio back into compliance in the near-
term during the normal course of trading.
For Investment Guidelines that apply at the
time of purchase, NISA will determine, in its
sole discretion, whether to execute trades to
move the portfolio within the applicable
guideline limit(s). In either case, such
breaches are not considered Investment
Guideline violations.
Additionally, NISA relies on external data
sources that we reasonably believe to be
accurate and reliable. NISA will seek to
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promptly correct any Investment Guideline
breached due to our reliance on an
inaccurate external data source; however,
such an issue is not considered an
Investment Guideline violation and NISA is
not responsible for such issues. NISA will
notify clients of external data source issues
that we identify and believe materially
impact their portfolio(s). Please see Item 8
– Methods of Analysis, Investment
Strategies and Risk of Loss for more
information about Cyber and Technology
Risk.
Market Disruptions. The manner, impact and
magnitude of market disruptions is very
difficult to predict, and therefore to mitigate
prospectively. Moreover, no Investment
Guidelines or investment management
agreements contemplate scenarios in which
global financial markets or economies
experience severe dislocation. Accordingly,
in such circumstances, it may be imprudent
or impossible to comply with client
Investment Guidelines or directions. If NISA
reasonably believes that it is imprudent or
impossible to comply with an Investment
Guideline or direction, NISA intends to act
(or not take an action) in a manner that we
believe at the time to be in the best interests
of our clients. Specifically, NISA may not
promptly cure, or NISA may be prevented
from promptly curing, passive guideline
breaches resulting from external sources
such as market movements, ratings
downgrades, collateral exchange and similar
events. NISA will seek to keep clients (or, in
the case of Managed Account Programs,
Sponsor(s)) apprised timely of such
instances.
Additionally, NISA suggests the following to
clients during severe market dislocations:
Provide as much advance notice as
possible for flows or exposure
adjustments.
Understand that some physical
markets may be more liquid than
others and if cash is necessary,
consider raising funds via these
more liquid markets.
For clients accustomed to more
frequent tactical trading, recognize
that the ability to initiate and unwind
positions may be compromised at
times in the future – either because
of market liquidity or impaired
activities of market participants.
Clients with derivatives positions
should take additional steps to
ensure that there is sufficient
collateral available in light of the
potential for large market moves.
ASSETS UNDER MANAGEMENT
NISA calculates assets under management
for use in our client and promotional
presentations, public website, regulatory
filings, consultant databases, composite
presentations and for other similar uses.
NISA’s assets under management
calculation normally includes actively
managed cash assets such as regular cash
portfolios, including those that utilize
derivatives to manage duration, temporary
portfolios holding securities that are set
aside to raise cash for upcoming
withdrawals, actively managed cash
collateral portfolios, and the marked-to-
market value of:
derivatives used in cash securities
portfolio management;
derivatives used to adjust the
duration of a cash securities
portfolio in which the use of
derivatives is incidental to the
investment strategy;
cash securities resulting from a
repurchase agreement transaction;
and
derivatives used in synthetic
exposure portfolios that are secured
by collateral.
NISA generally excludes the following
assets when calculating assets under
management:
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derivatives in overlay-only
engagements managed as part of
an overlay of cash assets not
managed by NISA;
derivatives in a duration overlay
engagement;
the market value of accounts over
which NISA no longer has discretion
such as an account that has been
liquidated for withdrawal or for which
NISA has received a termination
notice;
stable value assets for which NISA
only provides wrap administrative
services; and
collateral posted by a counterparty
to a client.
As of December 31, 2023, NISA managed
the following physical assets under
management:
Discretionary $287,721,988,249
Non-
Discretionary
$2,504,901
Total $287,724,493,150
Additionally, as of December 31, 2023, NISA
managed over $235 billion notional value in
derivatives. To calculate derivatives notional
under management for positions in markets
where notional is measured in volatility
exposure, NISA converts the instrument
volatility exposure into an option market
equivalent notional that matches the volatility
exposure. Repurchase Agreements are
reported in both physical assets and derivative
notional value. In some cases, NISA chooses
to combine physical assets and derivatives
notional into one total measure of assets
under management.
The assets NISA manages are predominantly
U.S. dollar denominated securities. NISA also
manages some portfolios that hold Canadian
dollar denominated securities and other non-
U.S. denominated securities. In these cases,
NISA uses the then-current exchange rate to
convert the market value of these portfolios
into U.S. dollars when calculating NISA’s
assets under management.
Additional Information with Respect to
Regulatory Assets Under Management
Found in Part 1 of this Form ADV. The SEC
has created a classification of assets under
management called “regulatory assets under
management” or “RAUM.” NISA’s RAUM
calculation, as defined by the SEC, includes
more assets than NISA normally includes
when calculating assets under management,
particularly for accounts that utilize
derivatives. In addition to requiring the
inclusion of more assets, the RAUM also
requires definitions of discretionary and non-
discretionary assets that are different from
those NISA uses when reporting assets
under management.
NISA’s RAUM includes the assets of all client
accounts that meet the SEC’s definition of a
securities portfolio, including cash and cash
equivalents, for which NISA provides
continuous and regular supervisory or
management services. Some of these assets
include, but are not limited to:
the absolute value of the marked-to-
market positions of each derivative
instrument, as well as cash and
cash equivalents held in these
accounts. Using the absolute value
of these positions means NISA
counts a negative marked-to-market
value as a positive;
the market value of cash and cash
equivalents (generally, Short Term
Investment Fund (“STIF”) and/or
Treasury Bills) set aside to meet
derivative collateral requirements;
temporary portfolios holding
securities that are set aside to raise
cash for upcoming withdrawals; and
stable value assets for which NISA
provides wrap administrative
services.
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The following is a non-exhaustive list of
assets that NISA does not include in RAUM:
the market value of broker-dealer
owned collateral posted to client
accounts; and
any measure of derivative notional
exposure.
RAUM is a higher number than the physical
assets under management number NISA
uses in our promotional materials.
CLIENT COMMUNICATIONS
NISA’s clients frequently communicate
written instructions to NISA, including via
email. NISA seeks to promptly acknowledge
receipt of any written instruction. NISA does
not consider any written instruction to have
been delivered to NISA until a NISA
employee acknowledges receipt of such
instruction.
NISA does not offer investment advisory
services directly to high-net-worth investors,
but only indirectly through external financial
intermediaries or Sponsor(s) of Managed
Account Programs. NISA is only authorized
to take instruction from the financial
intermediary or Sponsor. As such, high-net-
worth investors should contact their financial
intermediary, advisor or Sponsor with
respect to the underlying portfolio managed
by NISA. Please see NISA’s Form CRS
(Client Relationship Summary), located on
our website, www.nisa.com, for additional
information.
OTHER INFORMATION
NISA provides similar services to many
clients. NISA’s advice to one client
frequently does not relate to, and often
differs from, the advice given and/or timing
of NISA’s advice to another client. As a
result, NISA has the potential to be buying a
security for one client while we are selling
the security for another client.
NISA has the potential to acquire material,
non-public information or “inside information”
about companies or their securities. If NISA
believes we have inside information about a
security or issuer, we will not trade based on
that information. Having actual material,
non-public information would limit the
universe of securities in which NISA can
invest for our clients. NISA does not believe
that these restrictions will materially affect
our ability to provide investment advisory
services to our clients.