This New ETF Revolves Around Rotation

by Kyle Woodley | July 30, 2012 11:55 am

A week after the exchange-traded product engine started hitting on all cylinders[1], we’ve pretty much stalled. The past week saw just one new ETF come to life — but at least it’s an interesting one.

Ohio regional bank Huntington Bancshares (NASDAQ:HBAN[2]) has made another move into ETFs, this time with a sector rotation fund. The U.S. Equity Rotation Strategy ETF (NYSE:HUSE[3]) is an actively managed ETF that will target American companies of just about any size.

As the name implies, management will alter the fund’s sector weightings based on their view of the markets. However, the fund has a cap of 25% for any particular sector.

While HUSE’s holdings can run the gamut of capitalizations, the majority of its weight at launch was in large-caps. As far as sectors go, four of its top six holdings — Johnson & Johnson (NYSE:JNJ[4]), Pfizer (NYSE:PFE[5]), Merck & Co. (NYSE:MRK[6]) and Abbott Laboratories (NYSE:ABT[7]) — are in pharma. Apple (NASDAQ:AAPL[8]) is its top holding at 5%[9], and Exxon Mobil (NYSE:XOM[10]) rounds out its top six.

The fund charges 0.95% in expenses — high as far as equity ETFs go, but you’re paying for the active management — and will start with a scant $2.5 million under management. Huntington initially planned to roll over one of its mutual fund’s assets to create this fund, but it didn’t receive regulator permission.

Huntington entered the ETF business earlier this year[11] when it launched the Huntington EcoLogical Strategy ETF (NYSE:HECO[12]), a fund focused on businesses that “demonstrate environmental stewardship” and “advance green practices.”

Including last week’s launches, 10 new exchange-traded products have come to market in July. The previous week saw a number of new funds appealing to yield hunters[13], as well as a small-cap technical-characteristics fund and two leveraged Australian dollar funds. In all, 132 new funds have come out so far in 2012, according to[14].

Kyle Woodley[15] is the assistant editor of[16]. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley[17].

  1. started hitting on all cylinders:
  2. HBAN:
  3. HUSE:
  4. JNJ:
  5. PFE:
  6. MRK:
  7. ABT:
  8. AAPL:
  9. top holding at 5%:
  10. XOM:
  11. entered the ETF business earlier this year:
  12. HECO:
  13. number of new funds appealing to yield hunters:
  15. Kyle Woodley:
  17. @KyleWoodley:

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