Hidden ETF Gems

Back in late July of last year we profiled two little known (at the time) ETFs HECO (Huntington EcoLogical Strategy, Expense Ratio 0.95%) and HUSE (Huntington U.S. Equity Rotation Strategy, Expense Ratio 0.95%), and performance in both products has been more than encouraging since the mention, with trading activity in both absolutely taking off this first month of 2014.

Assets under management in the two products remains modest, with about $14.1 million in HUSE and $16.4 million in HECO, but daily trading volume in both funds has increased tremendously this month and it is hard not to notice this.

Average trading volume in HECO has grown to about 69,000 shares daily while volume in HUSE has increased to about 127,000 shares. This has been buoyed mostly by several sessions in January that have topped several hundred thousand shares in both funds, seemingly out of nowhere.

Trading volume or not, the HUSE strategy as it is described is an actively managed ETF focused on U.S. equity sector allocation, and shifting the weights of fund assets to and from various sectors accordingly. Currently the fund is overweight Health Care (20.19%), Technology (18.20%), and Industrials (17.82%), all three of which have undoubtedly been leading sectors in marketplace performance for several quarters now.

Being actively managed, it will be interesting to see how the sector allocations change if at all in the near term given we are firmly entrenched in core quarterly earnings season for most
companies. HUSE is categorized as an “all-cap” equity strategy, and its top holdings are names that are likely very familiar with most investors, AAPL (2.20%), GOOG (1.62%), XOM (1.61%), along with two Biotech names that have rallied considerably, BIIB (1.33%) and GILD (1.10%).

All of these companies are slated to report earnings in the next several weeks, notably with AAPL’s scheduled release on 1/27 after the close and GOOG’s 1/30 PM number. Meanwhile, HECO employs a different approach, and will likely appeal to those institutional managers and advisors whom allocate a portion of their portfolios to “Socially Responsible Investing” or SRI type strategies, which have been growing impressively in popularity in recent years.