(Corrects para 11 to say 11 months and not 13)
By Jessica Toonkel
NEW YORK, Jan 7 (Reuters) - Northwestern Mutual LifeInsurance is exploring a possible sale of its RussellInvestments asset management business, which has $247 billion inassets under management, according to four people familiar withthe situation
The Milwaukee-based insurer is discussing selling theRussell subsidiary because it has decided it is not a core partof its business, the people said on Tuesday.
All of the sources wished to remain anonymous because theyare not permitted to speak to the media.
A Northwestern Mutual spokeswoman declined to comment.
Seattle-based Russell provides pension consulting,investment management, transition management services andindexes such as the Russell 1000 Global Index.
If the firm decides to go ahead with a sale, it is unclearif the business would be sold in its entirety or broken up, twoof the sources said.
It could not be determined how much Northwestern wouldreceive if it decides to sell the firm. Northwestern boughtRussell, which was then called Frank Russell Company, in 1999for $1.2 billion.
Russell's roots date back to 1936 when founder Frank Russellestablished a brokerage firm in Tacoma, Washington. Over theyears it has grown as a consultant to pension plans, provider ofasset management and in 1984 it introduced its own indexes.Today Russell's indexes have $4.1 trillion in assets benchmarkedto them, according to Russell's website.
Russell would not be alone in selling its index business.Barclays Plc is also exploring a sale of its indexbusiness, sources have told Reuters.
Given the growing popularity of index-based funds andexchange-traded funds, firms like Barclays and Russell couldobtain a good premium for selling their index businesses,sources said.
In the first 11 months of 2013, investors poured $279billion into index-based funds and ETFs, almost double the $146billion they invested in actively managed funds and ETFs,according to fund researcher Morningstar Inc.
Russell and many of its peers encountered hurdles during the2008 financial crisis. That year, the firm shut down its hedgefund of funds operation. Russell's money market funds had morethan 5 percent exposure to securities of Lehman BrothersHoldings Inc, which went under in 2008. As a result NorthwesternMutual put $764 million into those money funds to protectinvestors.
In 2010, Russell sold its private equity manager, PantheonVentures, to Affiliated Managers Group for $775 million.
In 2012, Russell closed its 25 ETFs because it failed togarner significant assets after being in the market for littleover a year. (Reporting by Jessica Toonkel; editing by Matthew Lewis)
Barclays (BARC)
