Bloomberg News

Northern Trust Opens ETFs Based on Morningstar Indexes

September 26, 2011

(Updates with details of Northern Trust’s discontinued ETFs in third paragraph.)

Sept. 26 (Bloomberg) -- Northern Trust Corp., the Chicago- based asset manager and custody bank, opened four exchange- traded funds, including two based on indexes built by fund research firm Morningstar Inc.

The funds, which trade under the FlexShares brand name, will invest in natural resources, U.S. equities and Treasury inflation-protected securities, the company said today in a statement. The funds began trading Sept. 22, according to data compiled by Bloomberg.

The new funds are Northern Trust’s second venture into the ETF market. The firm previously ran 17 funds that tracked international, single-country indexes. With combined assets of $33 million, the funds were closed in February 2009 because of their “inability to attract significant market interest,” the company said in a statement at the time.

Morningstar created the indexes used by the FlexShares Morningstar Global Upstream Natural Resources Index Fund and the U.S. Market Factor Tilt Index Fund, which will buy U.S. stocks with a “rules tilt” toward small companies and those seen as undervalued.

Markit Group

Markit Group Ltd., which is based in London, built the indexes for the FlexShares iBoxx 3-Year Target Duration TIPS Index Fund and the 5-Year Target Duration TIPS Index Fund.

Northern Trust managed $684 billion in client investments and oversaw $4.4 trillion in custody assets at the end of June. Chicago-based Morningstar tracks about 400,000 investment products and is known for its star ratings of mutual funds.

U.S. ETFs have grown more than 13-fold since 2001 to $1.09 trillion at the end of July, according to data from the Investment Company Institute in Washington. ETFs typically track an index and, unlike mutual funds, trade like stocks throughout the day.

--Editors: Steven Crabill, Christian Baumgaertel

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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