Huntington Launches Its First ETF (HECO) - ETF News And Commentary
June 21 2012 - 6:21AM
Zacks
Huntington Asset Advisors has joined the ETF world with its new
family of ETFs, the Huntington Strategy Shares. In the first
iteration of this offering, the company has debuted the
EcoLogical Strategy Shares ETF (HECO).
This launch is a big event in the ETF industry for a couple of
reasons. First, Huntington is the first regional bank to offer ETFs
and could be a harbinger of events to come in the space should the
product see decent inflows. Furthermore, Huntington Asset Advisors
is also one of the few new providers to receive SEC approval this
year, suggesting that the deep freeze in terms of the government
approval process could finally be thawing (Read ETF Investors:
Beware The Coming ETN Backlash).
In terms of the actual product, HECO will be trending into the
ecologically-focused space with a special look on companies that
have pro-environment policies and practices. Overall, this will be
done by tracking companies that have positioned their firms to
respond to increased environmental legislation, cultural shifts to
more environmentally conscious consumption, and capital investments
in environmental projects.
Since the product is actively managed, it will be somewhat
expensive when compared to more traditional and broader-based ETFs.
Net expenses come in at 95 basis points a year while the gross
expense ratio is at 1.51%. Additionally, since the product is brand
new, trading volumes are likely to be quite low which could imply
wider bid ask spreads as well.
For holdings, the ETF currently has 25 stocks in its portfolio
with no one security comprising more than 6.5% of assets. Top
holdings go towards Hain Celestial Group (HAIN),
Whole Foods Market (WFM), and eBay
(EBAY).
Seemingly, the fund is tilted towards retail, technology, and
financials, while it skewed away from utilities and industrials
(see more on ETFs at the Zacks ETF Center).
ETF Competition
By and large, sustainable/ecologically friendly ETF investing
hasn’t really caught on with most investors. However, this hasn’t
stopped many issuers from debuting products in the still small
space. Currently, there are four funds that can be described as
tracking socially responsible industries and only two have any
meaningful amount of assets with DSI and KLD both possessing more
than $150 million in AUM.
Beyond these products, investors should also note the recent
launch from AdvisorShares, the Global Echo
ETF (GIVE). This product is also actively managed and
focuses on sustainable and impact investment opportunities (read
AdvisorShares Launches GIVE).
Volume is still light on this product while the net expense
ratio comes in at 1.7%. This is a tad higher than what investors
see in HECO and it could help Huntington to negate the first mover
advantage in the active sustainable market space.
The real question is whether the social/environmentally friendly
model can continue to attract assets and be a viable spot for six
funds. Currently, the answer to this question is unclear, but if
investors continue to embrace sustainable and environmentally
friendly companies, basket products like HECO could see decent
inflows in the near future.
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ISHARS-KLD 400 (DSI): ETF Research Reports
EBAY INC (EBAY): Free Stock Analysis Report
ADVSR-GLBL ECHO (GIVE): ETF Research Reports
HAIN CELESTIAL (HAIN): Free Stock Analysis Report
(HECO): ETF Research Reports
ISHARS-USA ESG (KLD): ETF Research Reports
WHOLE FOODS MKT (WFM): Free Stock Analysis Report
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