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A New Rush – BlackRock iShares and Huntington Asset Join Active ETFs

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On June 17th, 2010, two more players in the asset management space, BlackRock iShares and Huntington Asset Advisors, filed to launch new actively-managed ETFs. June is turning out to be another month where there has been a deluge of players filing for plans to enter the Active ETF space. The first two weeks of June have already seen AdvisorShares filing for two new Active ETFs, as well as Dreyfus and Horizons AlphaPro filing to launch more such products.

BlackRock iShares already has an existing actively-managed ETF which is the iShares Diversified Alternatives Trust [ALT] which is the only Active ETF on the market to follow a hedge fund like strategy. The new filing plans is quite general as was the Dreyfus filing earlier this week, but it does provide a preview of two new ETFs that are in the works. Given how generic the current strategies are, both funds are likely to become more refined and have a more focused strategy that would be revealed closer to their launch. Both funds will be advised by BlackRock Fund Advisors:

  1. iShares Active Fixed Income Fund – The objective of this fund will be to provide a combination of income and capital growth and it will use quantitative models to allocate assets among various sectors. Interestingly, the filing indicates that this fund will get its exposure by investing 80% of its assets in other ETFs advised by BFA that in turn invest in the fixed-income markets. So it appears that this initial fund will be looking to invest through other ETFs.
  2. iShares Active Equity Fund – This fund will look to provide long-term capital appreciation and will invest in domestic large caps in general, based on the relative return potential of the securities.

The other issuer that filed for actively-managed ETFs was Huntington Asset Advisors which has been managing money since 1917 and currently has $13 billion in assets under management . The advisor is a subsidiary of The Huntington National Bank. Huntington has filed to get relief for two quite interesting funds that are detailed in its prospectus:

  1. Global Rotating Strategy Fund – This fund will looks to achieve capital appreciation by investing in equities from different market segments such as small-cap, large cap, global equity, on the basis of current economic conditions and which segment is the most attractive give those conditions. The only sector rotation fund in the Active ETF space currently is in Canada, the Horizons AlphaPro Seasonal Rotation Fund (HAC).
  2. EcoLogical Strategy Fund – This fund also tries to achieve capital appreciation by investing in domestic stocks that satisfy one or more environmental themes. The fund can invest in companies of varying market cap and even those in foreign markets. This fund would be the first “green” oriented actively-managed ETF, if it comes to market.

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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