Leuthold Group, a Minneapolis-based research and investment management firm, has taken a significant step into the exchange-traded funds (ETF) arena by converting one of its longstanding mutual funds into an ETF. The Leuthold Select ETF (LST), which debuted Tuesday, was previously known as the Leuthold Select Industries mutual fund, a fund that has been in operation for 25 years.
Founded in 1981 as a research firm, Leuthold transitioned into the mutual fund space in 1995, and it now manages three mutual funds following the conversion. The firm, which oversees $1.1 billion in assets, made its initial move into the ETF market in 2020 with the launch of the Leuthold Core ETF (LCR), a tactical fund that invests in both stocks and bonds. The LCR, which currently has $81 million in assets, boasts a five-star rating from Morningstar and ranks in the 55th percentile of the tactical allocation category.
The newly converted Leuthold Select ETF (LST) is actively managed and continues to focus on capital appreciation through dynamic market themes, particularly equity group selection and rotation. The fund’s investment strategy targets sectors poised for growth based on current market conditions.
Mutual fund conversions into ETFs have become an increasingly popular trend. More than 55 mutual funds were converted into ETFs in the past year, a notable increase from 35 in 2023 and 20 in 2022. This trend reflects the growing appeal of ETFs, which offer operational simplicity and tax benefits compared to traditional mutual funds.
The Leuthold Select Industries mutual fund, from which LST was converted, had a strong performance last year, posting a 13.2% gain. Over the past five years, the fund has achieved an annualized return of 12.7%.
LST’s portfolio, managed by Scott Opsal, Director of Equities, along with Portfolio Managers Greg Swenson and Chun Wang, is diversified across 20 industry sectors, with notable weightings in communications services, systems software, and homebuilding.
Leuthold’s Chief Investment Officer, Doug Ramsey, emphasized the company’s confidence in the ETF conversion, citing LST as an example of the firm’s “longstanding, proven investment discipline.” He also noted the appeal of the ETF structure for its operational ease and tax advantages. “Given the success and market reception of LCR, converting Select Industries to an ETF was a natural next step for us,” Ramsey stated in a prepared statement.
As Leuthold expands its footprint in the ETF market, the LST ETF is poised to build on the firm’s track record of managing funds with a strong focus on active management and strategic sector rotation.
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