Pacer ETFs has launched the Pacer CFRA-Stovall Equal Weight Seasonal Rotation ETF (SZNE US) on NYSE Arca. Influenced by the investing adage “Sell in May and go away” the fund rotates semi-annually into sectors that have historically fared well during that time of the year.
The fund seasonally rotates between sectors of the S&P 500 Equal Weight Index which have historically fared well during that time of the year.
Pacer has partnered with investment research firm CFRA and Sam Stovall, its chief investment strategist for US equities, in developing the ETF.
Stovall is the author of The Seven Rules of Wall Street: Crash-Tested Investment Strategies That Beat the Market.
“CFRA and Sam have offered tremendous analysis on both the stock market and the economy for a very long time,” said Sean O’Hara, president of Pacer ETF Distributors. “Sam’s twenty plus years of experience as chief equity strategist at S&P and strategic approach to investing has us extremely excited about this partnership.
“Their analysis supports our belief in giving investors a common-sense approach with a risk management component that may help them grow their nest eggs and preserve it in case of a downturn.”
The fund tracks an index created in-house at Pacer that rotates between certain sectors of the S&P 500 Equal Weight Index. From November through April, the fund will offer equal weight exposure to companies in the consumer discretionary, industrials, information technology and material sectors. From May through October, the ETF will be exposed to companies in the defensive sectors of consumer staples and health care.
“CFRA is pleased to partner with Pacer to provide equity strategies that leverage the stock market’s tendency to exhibit alternating seasonal strength and weakness,” said Sam Stovall. “Our research shows that historically the S&P 500’s average price change has been substantially higher during the six months from 1 November through 30 April than it has been during the six months from 1 May through 31 October, but we believe you should rotate based on seasonal sector trends, not retreat.”
Joe Thomson, founder and president of Pacer Financial, added, “The Pacer CFRA-Stovall Equal Weight Seasonal Rotation ETF is an exciting new partnership for us at Pacer. We believe this new fund is something investors will embrace as it is a new way to strategically balance growth opportunities while maximizing the tax efficiency of the ETF wrapper.”
SZNE comes with an expense ratio of 0.60%.
S&P Dow Jones Indices allocates S&P 500 stocks to specific sectors based on the Global Industry Classification Standard (GICS) which it co-administers with MSCI. As such, the fund’s index will be affected by changes to the GICS structure that are due to be implemented at the end of September. Pacer has not yet indicated how the upcoming reclassifications will affect the fund’s strategy.