US banking group Northern Trust has said it is to exit its ETF business, Northern Exchange Traded Shares, after less than a year of operation, citing doubts as to the funds’ future viability.

In a statement, Northern Trust said that its Board had decided on the closure due to “the inability of the funds to attract significant market interest since their inception” and a lack prospects for growth in their assets in the foreseeable future.

The decision by the Chicago-based bank to quit the ETF business comes after what has been a period of rapid growth in the volume and turnover of these exchange-listed funds. Large ETF providers in the field include iShares, the ETF brand of Barclays Global Investors, State Street, Lyxor - part of Societe Generale, and Deutsche Bank.

The 17 NETS funds were designed to track international, single-country benchmarks and were launched in April 2008.  At 31 December they had approximately $33 million in assets.  Affected NETS funds include the Hang Seng China Enterprises Index Fund, the FTSE Singapore Straits Times Index Fund and the DAX Index Fund.

NETS is scheduled to close on 20 February, with 9 February being the last day of trading for the shares of its funds.   After the delisting, remaining shareholders in the funds will receive a cash distribution equal to the net asset value as determined on the liquidation date. 

In other news this week, Northern Trust named US banking group Robert Browne as new chief investment officer, succeeding Orie Dudley, who is retiring.

Founded in 1889, Northern Trust has a network of 85 offices in 18 US states, along with international offices in 15 locations across North America, Europe, the Middle East and the Asia-Pacific region.

At 31 December, 2008, Northern Trust had assets under custody of $3.0 trillion, and assets under investment management of $575.5 billion.