Huntington National rebrands unit

After 5 years, portfolio has $400 million in assets

Huntington National Bank is rebranding its options trading unit as the portfolio approaches its fifth anniversary with $400 million in assets.

Starting from zero in 2001, the fund Exclusive Capital Management has grown to about 70 private investors with a minimum account of $500,000 and some ranging from $15 million to $75 million. Terry Monahan, managing director of the fund formerly called Options Management Group, said it is seeking further growth by building an outside network of brokers and wealth managers.

"We'd like to be at $1 billion in the next two years," he said, adding the financial services unit is the revenue growth leader in Huntington's Investment Management Group, which has $10 billion in assets.

Over the past two years, Exclusive Capital has delivered 23.1 percent return on funds invested, compared with the S&P 500 over the same period that delivered 11.9 percent. During the first nine months of this year, the fund boasted 10.5 percent return versus the S&P's 2.8 percent.

Although half the fund's assets are in S&P 500 stocks, Monahan said the operation emphasizes absolute returns rather than just trying to outperform a benchmark like the Standard & Poor's 500 index. He noted many equity managers will brag about beating the S&P by 3 to 5 percent, but the trouble is in down years for the index that still represents a loss.

Monahan said the fund is able to squeeze additional performance out of its S&P 500 stocks because the other half of its assets bankroll options: writing calls and puts on those same stocks.

By writing options on S&P 500 stocks, Exclusive Capital is selling the right to buy a rising stock once it hits a certain price (a call) or the right to acquire a falling stock (a put) at a certain price. By selling options on the stock the fund holds, it generates additional cash flow for the fund.

Exclusive Capital also hedges its entire stock portfolio with put options.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.