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Huntington Bank, a regional bank based in Ohio, is continuing its expansion in the ETF world with a brand new fund just about a month after it debuted its first product, the Huntington EcoLogical Strategy ETF ( HECO - ETF report ) . The new ETF will take a different approach to the market, offering up investors an active technique to U.S. sector investing with the Huntington US Equity Rotation Strategy ETF ( HUSE - ETF report ) .
The brand new fund looks to achieve capital appreciation levels in excess of the broad S&P Composite 1500 by over/underweighting certain industry segments of the index. In theory, the fund looks to hold bigger positions in sectors that are projected to outperform, while holding a smaller amount of assets in industries that are expected to lag the overall market (also read Three Low Beta Sector ETFs).
In terms of fees, the product has a net expense ratio of 95 basis points, putting it in the low end of the active ETF world. Still, the new launch looks to have light volume, at least initially, so bid ask spreads could be relatively wide for the fund in the beginning.
For holdings, the product is definitely weighted towards large caps as Apple takes the top spot at 6.2% of assets, followed by a 3% holding in Pfizer and a 2.3% allocation to ExxonMobil. The focus also looks to be on safety as well, as a number of giant caps or names in defensive industries dominate the top holdings list for HUSE at its inception (read Looking For Safety? Try These Money Market ETFs).
"We have an established team of investment experts, who continually monitor the economy, in order to identify which sectors or segments are best positioned to do well in a given market cycle or economic environment," said Randy Bateman, Huntington's chief investment officer and president of Huntington Asset Advisors in a press release. "As a result, Huntington's US Equity Rotation Strategy has the flexibility to take advantage of what we believe are the best opportunities in the domestic market today."
Huntington Bank Funds
Clearly, Huntington Bank is very serious about ramping up its exposure to the ETF world and complimenting its existing mutual fund lineup. Currently, Huntington has a variety of mutual funds including ones targeting various allocation levels, growth and income, emerging markets, and even fixed income securities (read ETFs vs. Mutual Funds).
Interestingly, the company isn’t looking to take an index-based approach to the ETF market and is instead forging ahead with a lineup of active funds. This is potentially a risky strategy as a number of active ETFs haven’t exactly seen a great deal in new assets despite outperformance or solid investment strategies.
In fact, there are roughly 50 other ‘active’ ETFs in the market today and these only account for $7.5 billion in AUM. Furthermore, the top three funds in this segment account for nearly two-thirds of this total, suggesting a very top heavy market (see more in the Zacks ETF Center).
However, many analysts expect this to be a huge growth market in the coming months and years in the ETF industry and it appears as though Huntington is taking a proactive step to establish itself in this corner of the asset management universe. If nothing else, the series of launches by the Ohio-based firm will certainly separate the company from a number of its regional banking peers who will clearly be behind the curve when it comes to exchange-traded funds.
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