Huntington, fresh off its initial foray into the ETF industry in June, has doubled the size of its lineup with the launch of an actively managed ETF that will implement a sector rotation strategy. The new U.S. Equity Rotation Strategy ETF (HUSE) will invest in U.S. that are included in the S&P Composite 1500, with the flexibility to over- or under-weight certain industry sectors depending on which the managers believe to have the greatest or least potential for capital appreciation given the current market environment.
The idea behind the new ETF is relatively straightforward; the managers will seek to identify the most promising and least promising sectors, and tilt the portfolio accordingly. In many environments, the difference between the best and worst performing environments can be substantial. So far in 2012, the Technology SPDR (XLK) is up about 12% while the Energy SPDR (XLE) is in negative territory.
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“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 the Huntington Asset Advisors. “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.”
Under The Hood
Among the largest positions in JUSE at launch are Apple (AAPL), Pfizer (PFE), and Exxon Mobil (XOM). According to Morningstar, about 75% of the portfolio consists of large cap and giant cap stocks, with the bulk of the remainder allocated to mid caps.
Guggenheim had previously offered a trio of “rotation” ETFs, including the Sector Rotation ETF (XRO). Back in the Claymore days, the company offered the Claymore/Zacks Dividend Rotation ETF (IRO) and Claymore/Zacks Country Rotation ETF (CRO). All three of those ETFs were shuttered after failing to generate substantial assets.
HUSE is the second ETF from Columbus, Ohio based Huntington; earlier this year, the company debuted its EcoLogical Strategy ETF (HECO). That ETF, which is also actively managed, targets companies that are positioned to respond to increased environmental legislation, cultural shifts towards environmentally conscious consumption, and capital investments in environmentally oriented projects.
Disclosure: No positions at time of writing.