DOW JONES NEWSWIRES
Northern Trust Corp. (NTRS) will close its small exchange-traded
fund business on Feb. 20 because of the funds' inability to attract
sufficient investor interest and the prospect of future growth.
The move comes as the shakeout continues in the ETF industry,
which saw a surge in offerings as money managers looked to take
advantage of investors wanting exposure to very specific type of
assets. But a flood of ETFs hit the market in recent years, and the
boom left some funds with relatively little in the way of investor
interest.
Nonetheless, they have still garnered more interest of late than
mutual funds - through November, ETFs posted net inflows of $138
billion for the year, while long-term mutual funds saw outflows of
$185 billion, according to consultants Financial Research Corp.
Northern Trust's ETF business includes 17 funds launched in May
to track international, single-country benchmarks like the DAX in
Frankfurt and the FTSE 100 in London. They competed against iShares
ETFs from Barclays PLC (BCS) that follow single-country benchmarks
from the Morgan Stanley Capital International index family.
As of Dec. 31 the Northern Trust funds had just $33 million in
combined assets.
ETFs resemble regular mutual funds but trade on exchanges like
stocks and have structure that has cost and tax advantages over
most regular mutual funds. But some, like those at Northern Trust,
have been liquidated because their investment approaches failed to
draw sufficient interest and the credit-markets turmoil caused some
bond ETFs to trade at prices that deviate more than usual from the
funds' underlying net assets values.
Feb. 9 will be the last day of trading shares of the Northern
Trust funds on NYSE Arca Inc.
Primarily serving corporations, institutions and wealthy
individuals, Northern Trust is a prominent provider of
institutional index-management services.
Its shares recently traded at $54.88, down 34 cents.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com
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