Podcast Center
Video Center
Webcasts
Resource Center
Events
October 01, 2008 at 04:00 AM
The 19th-century American catch phrase “Go West, young man” is attributed to New York newspaper editor Horace Greeley, who used it in an 1865 editorial. While Greeley is no longer around, an updated version of what he said might be in order. Today, his popular expression might read more along the lines of, “Go Global, young man!”
One place that readily illustrates this global-minded perspective is the exchange-traded fund (ETF) marketplace.
International ETFs hold in the vicinity of $140 billion in assets, which is roughly one-quarter of the entire U.S. ETF market. Of this group, funds that focus on individual countries have become popular choices. Such funds allow investors to exclude undesirable markets by concentrating their holdings in specific regions or countries.
During the spring of this year, Northern Trust began rolling out a suite of ETFs focused on global equity markets. As of mid-August the firm managed 15 distinct funds concentrated in a broad array of countries.
Here to discuss these funds is Peter K. Ewing, senior vice president and managing director of the ETF Group at Northern Trust Global Investments.
Research: Northern Trust Global Investments recently entered the U.S. ETF marketplace. Tell us about your company’s ETF lineup.Ewing: The NETS Single-Market Series seeks to offer ETF-based exposure to the world’s most relevant equities markets using the world’s best recognized benchmarks. The NETS product suite reflects Northern Trust’s commitment to (1) time-tested principles of sound portfolio construction and asset classifications and (2) clear-sighted innovation in service of these principles.
Virtually all of the benchmarks that define our product offerings benefit from wide-scale acceptance by capital-market experts, asset managers and securities traders around the world. This fact is evident from the vast amount of investment capital that is tied to these benchmarks through commingled investment vehicles, exchange-traded derivatives and large books of over-the-counter derivatives in the local markets for these benchmarks and elsewhere in the world.
Northern Trust believes that the depth and breadth of the acceptance of these benchmarks yield a number of important benefits, including increased liquidity for the underlying portfolio holdings, hedging and arbitrage trading strategies and informatics that can be used to inform investment and risk management processes. For example, the fact that the majority of trading desks at asset management firms and hedge funds around the world constantly follow the intraday performance of, say, Hang Seng, FTSE 100, S&P/ASX and DAX contributes to the informational significance of these benchmarks and to the information or analysis that is routinely developed about them. If investors construct non-U.S. equities portfolios around these benchmarks, they can benefit from this information as they make investment and risk-management decisions.
In terms of assets, which Northern Trust ETFs have enjoyed the most investor interest?In the short period of time that the NETS family of ETFs has been available, we have seen ready and broad acknowledgement of the merits of the overall NETS suite among registered investment advisor, hedge funds and other institutional traders, select pension funds and sophisticated self-directed investors. Frankly, the suite itself has generated more interest as a group than has any single NETS ETF, viewed in isolation from other NETS ETFs. But we have recently seen signs of particular interest in NETS Hang Seng Index Fund (Hong Kong), NETS S&P/ASX 200 Index Fund (Australia), NETS Hang Seng China Enterprises Index Fund (China) and NETS TA-25 Index Fund (Israel).
