Huntington’s Active ETF Plans: A Potential Gamechanger

by on June 25, 2010

Despite a tremendous amount of hype and some inherent structural advantages, the actively-managed ETF space has been slow to take off. Outside of the actively-managed currency products from WisdomTree and PIMCO’s active cash substitute product, the flow of cash into active ETFs has been more of a trickle [see How MINT Hauled In $800 Million]. But there are signs that the floodgates are about to burst open. A number of giant mutual fund companies have laid the groundwork to launch active ETFs, a development that would likely jumpstart the industry and bring in a significant slug of cash overnight.

Earlier this year, we highlighted three gamechangers that could dramatically change the active ETF space. This week, details on one of those gamechangers emerged from an unlikely source. Huntington Asset Advisors, managing $13.5 billion in assets, is known primarily for its family of 24 mutual funds. Following the lead of many other major mutual fund providers, Huntington has realized the opportunities that ETFs offer, and has begun making plans to wade into the ETF waters. But Huntington may be preparing to take a unique approach, indicating that it may collapse an existing mutual fund into the ETF wrapper. “If we could start a fund like that by either collapsing our existing fund into it, or creating a separate fund in the hopes of possibly taking some money out of the mutual fund and putting it into an ETF, for us, that makes a lot of sense” said the firm’s president, Randy Bateman, to Index Universe. Collapsing an existing mutual fund into an ETF would be an industry first, and if successful could lead others to follow suit.

Huntington has filed for exemptive relief to launch active ETFs, and has released some details on two proposed funds:

  • Huntington Global Rotating Strategy Fund: This fund would be utilize a strategy that aims to maximize earnings by shuffling holdings between sectors and market capitalization sizes depending on economic conditions. The proposed fund would have an expense ratio of 0.60%.
  • Huntington Ecological Strategy Fund: This ETF would invest in U.S. stocks operating in the “green” energy space, focusing on companies with environmental themes.

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Disclosure: No positions at time of writing.