When Northern Trust filed last October to enter the exchange-traded funds market, all signs pointed to a major marketing coup by the Chicago-based financial giant.

Although late to the retail marketplace, among the ETFs registered with the Securities and Exchange Commission was a true all-global fund. In one portfolio, Northern Trust was going to make available stocks from the U.S. and developed international markets along with emerging markets.

For total stock market fans, it seemed a new day was dawning.

Well, it was for them. But Northern Trust got beaten to the punch. On March 28, Barclays Global Investors launched the iShares MSCI ACWI Index Fund (NASDAQ: ACWI). (See related story.) Within days, the Vanguard Group filed to start its own all-global fund. (See related story.)

Meanwhile, on April 9, Northern Trust finally hit the ETF market with six single-country funds. (See related story.)

So is Northern Trust going to lose its first-mover status in this new marketplace?

Steven Schoenfeld, the company's chief investment officer for global quantitative management, says there figures to be plenty of assets still available for early movers in the all-world ETF market.

"We believe the movement by investors to take a more integrated view of their equity allocations is a very powerful one. This is a long-term trend and a lot of investors are still in the early stages of allocating their assets in more segmented ways," he said.

Northern Trust, Schoenfeld adds, prefers to take a step-by-step approach. The firm will set its ETF table first with more targeted portfolios for those already looking at gaining exposure to specific international markets. Then, presumably, will come the icing on its global cake.

"Clearly in the long run we believe in the product set we're developing," said Schoenfeld last week after Northern Trust's initial launches were complete.

"We knew the total global market in a single-equity vehicle was an idea whose time had come. But we also were fully aware that others might be inspired by the same concept."

Stepping-Stone

Ironically, Schoenfeld was the main driver who got Barclays to develop an all-world ex-U.S. index fund for large institutional clients. BGI came out with the first such stepping-stone to a true all-world portfolio in 1997. That was before iShares were even born and Schoenfeld was head of BGI's international equity strategy group.

Even with the new ETFs launched by BGI, Schoenfeld believes that Northern Trust fund will be more complete. In other words, "Having the total global market and some of its subsets makes a lot of sense as investors increasingly look overseas and look at the world's equities as a global marketplace," Schoenfeld said.

The firm started setting its table, so to speak, with the six most well-known indexes in each country. That's significant, Schoenfeld says, since now investors in the U.S. can track major indexes after overseas markets have closed.

In time, he sees indexing geeks blogging on the Internet about technical signals they can garner from a wide universe of ETFs tracking all of the major benchmarks around the world - in their own local time.

"These first six indexes and the bulk of the next dozen or so we'll be bringing out are the recognized flagships for each market. They represent the most liquid and transparent constituents," Schoenfeld said. "It's bringing these foreign markets closer to the U.S. marketplace."

[Note: Schoenfeld is the founder of IndexUniverse. But he no longer has any direct ownership or editorial involvement in the site or its parent company.]

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