Northern Trust Asset Management is making one of the largest mutual-fund-to-ETF moves yet, with plans to convert six established funds holding about $33 billion into exchange-traded funds during the first quarter of 2027.
The announcement is more significant than another ETF launch. Northern Trust is taking mature, already scaled strategies and changing the wrapper around them, a move that will more than double the firm’s ETF assets from $27 billion as of June 30, 2026. Northern Trust managed $1.6 trillion overall at the same date.
The largest conversion is the Northern Stock Index Fund, with $19.3 billion in assets, which is set to become the Northern Trust MSCI US 500 ETF. Five other funds covering international equities, municipal income, mid caps, small caps and equity income will follow. Northern Trust
Source: Northern Trust Asset Management, assets as of June 30, 2026.
Northern Trust is part of a wider migration of established strategies into ETF wrappers rather than a one-off conversion. Nukoud’s recent MSCI active ETF analysis found that 71% of advisers expect to increase active ETF use over the next two years, while 58% said a new active ETF allocation from an existing manager would most likely replace a mutual fund or UCITS holding.
The pressure is also visible in pricing; Nukoud's ETF fee study found that active ETFs typically charge less than many traditional active mutual funds, even as more complex ETF strategies command higher fees than plain passive funds.
This Is About Distribution as Much as Fees
Northern Trust says the conversions reflect investor and adviser demand for ETFs as a preferred portfolio vehicle, citing tax efficiency, trading flexibility and transparency.
That rationale fits a broader industry shift Morningstar has been documenting. ETFs attracted nearly $1.5 trillion of inflows in 2025, and by June 2026 they represented about 39% of the combined U.S. ETF and mutual-fund market, almost double their share in 2020.
The Northern Trust move is important because it is not centered on speculative or niche strategies. These are core equity and fixed-income funds with substantial existing assets, suggesting the ETF wrapper is becoming a default distribution choice even for long-established portfolio building blocks.
Morningstar also notes that Northern Trust has been expanding its ETF business as a strategic priority, while maintaining generally below-average fees across its fund lineup.
Conversion Does Not Automatically Create Growth
The ETF wrapper offers advantages, but Morningstar’s work on previous conversions shows that changing structure alone does not guarantee new inflows.
Converted funds enter one of the most competitive parts of asset management. Mutual funds can also retain certain advantages for some active managers, including the ability to close to new investors when capacity becomes an issue and less frequent portfolio disclosure. ETFs generally cannot restrict new money in the same way and typically disclose holdings daily.
There are also practical implications for shareholders. VettaFi notes that investors holding the affected funds in accounts unable to custody ETFs could be cashed out, potentially creating a taxable event.
BlackRock Is Taking a Different Route
Northern Trust is converting entire mutual funds into ETFs, while BlackRock is keeping the mutual-fund structure and adding ETF share classes.
On September 29, BlackRock filed with the SEC to add ETF share classes to five active mutual funds with nearly $55 billion in combined assets, including its High Yield, Equity Dividend and several municipal-bond strategies. If approved, investors could access the same portfolios through either mutual-fund or ETF shares
A Larger Test of the ETF Wrapper
The scale is what makes Northern Trust’s announcement stand out. Converting $33 billion of existing mutual-fund assets is very different from launching a small ETF and waiting to see whether it gathers money.
For Northern Trust, the move immediately expands its ETF platform with strategies that already have clients, operating history and scale. For the broader industry, it provides another test of whether large managers can move legacy assets into ETFs without sacrificing distribution or investor retention.
The conversion also adds weight to a trend Nukoud has already covered in its MSCI active ETF analysis: advisers increasingly want ETF versions of strategies they already use.
The next test is whether those converted funds attract meaningful new assets once they begin trading in 2027.
