Northern Trust is set to launch its U.S. exchange-traded fund (ETF) servicing operations this year, aiming to capitalize on the increasing trend of mutual funds converting to ETFs. Phil Nanof, head of ETF Services, Americas at Northern Trust, stated that the firm is making substantial investments in proprietary infrastructure to support the unique requirements of U.S. ETFs. This move is an extension of Northern Trust's existing ETF servicing in Europe and Asia Pacific.
The firm anticipates strong growth in the ETF market, with U.S. ETF assets reaching a record $14.3 trillion by the end of February this year, surpassing the previous high of $13.9 trillion in January 2026. Net inflows in February alone were $192.3 billion, contributing to a record $359 billion year-to-date. Nanof highlighted the rapid innovation, with over 1,000 ETFs launched last year in the U.S., and noted that more than 80% of these were actively managed.
Northern Trust's strategy is to support its existing mutual fund clients as they transition into the ETF space. To achieve this, they have partnered with Intercontinental Exchange (ICE) to use the ICE ETF Hub as the order-taking platform for their U.S. ETF servicing capability. This collaboration aims to standardize and automate the creation and redemption process for ETFs, which has historically been manual. Nanof emphasized that this integration is a key component of their end-to-end, fully automated servicing solution. While acknowledging the competitive market, Northern Trust believes its client-centric approach and significant capital investment will differentiate it, particularly among asset managers in the $2 billion to $20 billion range.
