With the U.S. equities markets well off their October 2007 highs, it may be surprising to learn that there has been very little let up in the pace of exchange- traded fund creation. While it’s true that a handful of ETFs have folded over the past several months (a topic we covered in March), undercapitalized and poorly conceived funds will face challenges regardless of the overall market environment. The general state of the ETF industry remains robust . According to the Investment Company Institute, there were 644 ETFs trading in the U.S. at the end of March—the last month for which complete data is available—with a total of $571.7 billion invested. Most ETF commentators believe the total number of ETFs on U.S. exchanges has grown since then, to more than 700.

Earlier this spring, Northern Trust (NTRS), the Chicago-based bank with approximately $4 trillion in assets (about $780 billion of which are under investment management), became one of the newest entrants into the ETF marketplace. On April 9, the bank’s asset management unit, Northern Trust Global Investments, launched the first of its Northern Exchange Traded Shares, or “NETS”—a family of country-specific funds that place the newcomer in direct competition with such ETF heavyweights as Barclays (BCS) iShares, Vanguard and PowerShares. Each of these well-known firms already has a line of established international, regional or country-specific funds, such as the iShares MSCI Brazil Index Fund (EWZ), the PowerShares Golden Dragon Halter USX China Portfolio (PGJ) or the Vanguard Emerging Markets ETF (VWO).

Based on a quick review of their composition and fee structure, Northern Trust’s NETS appear to be directly aimed at iShares, which was the first fund sponsor to stake a claim in the international ETF space and is still the largest player. While Northern Trust doesn’t yet offer regional ETFs comparable to those in the iShares stable—the EMU Index Fund (EZU), the Pacific ex-Japan Fund (EPP), the S&P Europe 350 Index Fund (IEV) and the S&P Latin America 40 Index Fund (ILF)—Northern Trust reportedly has two global ETFs in the works.

So how do the new Northern Trust funds stack up against the competition? The principal difference between NETS and the iShares country-specific funds lies in their underlying indexes. Instead of the MSCI International Equity indexes that Barclays licenses for its iShares line, Northern Trust uses the index that is most widely followed in the country in question. For instance, the NETS CAC40 Index Fund (FRC), which tracks the French stock market, uses the CAC40—essentially, the Dow Jones Industrial Average of France—as the basis for the fund. Similarly, Northern Trust uses Germany’s DAX Index for its exposure to the German market (DAX), the FTSE 100 for the U.K. (LDN), etc.

According to Northern Trust, building country-specific ETFs around the most widely followed “local” indexes provides a couple of important advantages. First, investors who wish to pursue sophisticated strategies using index futures and options contracts can do so more easily, since the tracking indexes for the NETS ETFs have the biggest share of those markets. Northern Trust also believes that NETS may prove to be more liquid than are the country-specific funds sponsored by their competitors. Because the indexes tracked by NETS are so widely followed and frequently traded, the market makers who create and redeem NETS may be able to do so more efficiently.

While those differences may be significant for the hedge funds and institutional traders that typically deploy sophisticated hedging strategies or trade in large blocks of shares, how important are they for individual investors? In terms of holdings, the new Northern Trust ETFs and their iShares competitors just may not be different enough under the surface to matter to most do-it-yourselfers.

For example, the NETS CAC40 Index Fund and the iShares MSCI France Index Fund (EWQ) offer investors fairly similar cross sections of the French economy. As of May 30, the top 10 holdings of the NETS CAC40 Index Fund were energy giant Total (14.20 percent of net assets), industrial firm Suez (6.50 percent), BNP Paribas (6.22 percent), ArcelorMittal (6.17 percent) and sanofi-aventis (5.70 percent). The top three industry sectors by weight were Financials (16.14 percent), Oil & Gas (14.21 percent) and Industrials (13.32 percent).

As of April 30, the latest date for which complete information is available, the top holdings of the iShares MSCI France Index Fund were nearly identical: Total (12.62 percent), Suez (5.15 percent), BNP Paribas (6.13 percent), ArcelorMittal (5.80 percent) and sanofi-aventis (5.57 percent). The two funds part ways somewhat when it comes to sector weighting; the largest EWQ industry sectors were Financials (18.42 percent), Energy (13.73) and Consumer Discretionary (13.57).

The fees the two companies charge are also comparable. Northern Trust charges an annual fee of 0.47 percent for most of its NETS, while the fees for most iShares country-specific funds are 0.51 percent.

Individual investors who are interested in NETS should keep in mind that, while the funds are new, most of them have yet to attract the critical mass of net assets—at least $10 million—that most commentators believe is required to maintain an ETF as a going concern. As of May 30, after six weeks of trading, the NETS CAC40 had about $2.6 million under management. The comparable iShares fund has $350 million in net assets. Northern Trust, however, is no cash-strapped ETF startup. As long as the bank puts enough marketing muscle behind its NETS, they should be around for the long haul.