Huntington Asset Advisors, the investment arm of Columbus, Ohio-based Huntington Bank, filed with the Securities and Exchange Commission to offer actively managed exchange-traded funds, and said separately that it plans on rolling out two initial funds under the exemptive relief filing, one of which it hopes to seed with assets from one of its existing mutual funds.

Huntington, which has a family of 24 mutual funds, said it may pilfer assets from its Rotating Index Fund to seed the launch of a planned ETF called the Huntington Global Rotating Strategy Fund, according to Randy Bateman, the firm’s president and chief investment officer. The two funds will have broadly similar strategies, though the ETF would be cheaper, he said.

“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 the ETF, for us, that makes a lot of sense,” Bateman said in telephone interview. “It also makes sense for the market maker not to have to seed the fund,” he added.

While some closed-end funds have been folded into ETFs, Huntington Asset Advisors appears to be the first company that’s contemplating the collapse of a mutual fund into an ETF. However, Vanguard Group designed its line of exchange-traded funds as a separate share classes of its existing mutual funds to ease the introduction of its ETFs.

The other ETF Huntington has in the works is the Huntington Ecological Strategy Fund, which the company described in a press release as the first-ever actively managed “green” ETF.

The Strategies

The Global Rotating Strategy Fund is designed to achieve capital appreciation by shifting holdings among equity market segments, including mid-cap, large-cap and within-industry sectors, depending on economic conditions. There’s currently only one sector rotation fund among actively managed ETFs, Canada’s Horizon AlphaPro Seasonal Rotation Fund (TSX: HAC), Huntington said in its press release.

The rotating strategy mutual fund that Huntington may use to help the launch of the similar ETF is listed under the symbol “HRIGX.” The mutual fund, which Huntington launched in 2001, has an expense ratio of 1.19 percent. The similar ETF will have a management fee of 0.60 percent, plus a number of other expenses, Bateman said, stressing that the ETF will be cheaper than the mutual fund and priced to be competitive with similar ETFs.

The Huntington Ecological Strategy Fund will invest primarily in domestic stocks with environmental themes. It won’t be designed to track socially responsible indexes like the Dow Jones Sustainability Indexes or the ACT Australian Cleantech Index. If successfully launched, it will be the first “green” actively managed ETF.

Huntington Asset Advisors currently manages about $13.5 billion in assets and hopes that continued interest in environmentally oriented investing will contribute to the success of its green ETF.

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