Pacer ETFs has reached the $4 billion assets under management milestone, adding over $1bn AUM within just four months, amid strong demand for the firm’s ‘Trendpilot’ range of ETFs.
Sean O’Hara, President of Pacer ETF Distributors.
The Trendpilot suite aims to help investors navigate turbulent equity markets by using a rules-based process to shift exposure into Treasury bills during periods of market stress.
The strategy seeks to participate in the market when it is trending up, trim equity exposure by 50% during short-term market volatility, and exit the market when it is trending down.
Sean O’Hara, President of Pacer ETFs Distributors, commented, “The Trendpilot Series uses an objective, rules-based trend following strategy that changes exposure from equities to T-bills based on a 200 day moving average of its index. This passive approach is one way to maintain market exposure during the upside while adding downside risk management against future declines.”
O’Hara continued, “Investors in or nearing retirement are always trying to strike a balance between managing wealth and exposure to equity markets. With life expectancy stretching 30 years after the typical retirement age, few investors can afford to pump the brakes and pull out of growth assets entirely. The Trendpilot Series provides a passive strategy to help investors stay in the market but manage their equities exposure based on technical factors, not emotions.”
The suite includes four funds targeting the US large-cap (either S&P 500 or Nasdaq 100), US mid-cap (S&P MidCap 400), and broad eurozone (FTSE Eurozone Index) equity markets. All four ETFs trade on Cboe BZX.
The largest fund in the suite is the Pacer Trendpilot US Large Cap ETF (PTLC US) which has doubled its AUM to $2bn over the past year. The fund, which tracks the S&P 500 during normal market conditions, comes with an expense ratio of 0.60%.
The strength of the Trendpilot strategy can best be seen when comparing the fund’s performance to the S&P 500 during 2018. Due to a market correction in February and March, and again in October through December, the S&P 500 ended 2018 down 4.4%; however, due to the Trendpilot ETF’s ability to reduce equity exposure during these challenging periods, the fund gained 1.7% over the year.
O’Hara notes, “Over the past year we have seen volatility return. It’s typical for investors to act on their emotions when markets act like they have been recently, but there are still ways to remove that inherent fear and play the market. Trendpilot’s core strategy aims to manage downside risk and thus appeals to more cautious investors. The strategy seeks to participate in the market when it is trending up, pare back market exposure during the short-term market downtrends, and prevent extended losses by moving to T-bills during long-term market downtrends. This strategy is ideal for today’s market because it provides value to the investor in an array of market conditions.”
The other funds in the Trendpilot suite include the Pacer Trendpilot US Mid Cap ETF (PTMC US), which houses nearly $750m AUM; the Pacer Trendpilot 100 ETF (PTNQ US), $460m AUM; and the Pacer Trendpilot European Index ETF (PTEU US), $175m AUM.