This Unique ETF Capitalizes On Bullish Trends, While Protecting From Downturns
A firm located in the greater suburban Philadelphia area is Paoli, PA-based Pacer Financial, a firm that may or may not be known to most ETF portfolio managers and investors.
The company, however, now has six ETFs listed and assets under management that are hard to ignore (over $827 million) with PTLC (Pacer Trendpilot 750, Expense Ratio 0.60%) leading the way with over $420 million in AUM.
Notably PTLC, along with the major U.S. indexes, is trading at a new all-time high today. We have covered PTLC in this piece in the past, having debuted in June of 2015, so the fund is still generally new to the marketplace. Still, it’s already attracted a substantial base of assets in a relatively short amount of time.
The Trendpilot strategy is likely not known to many investors and fund managers either, but as we have profiled here in the past, fund literature suggests the following:
“Participate in the market when it is trending up. Pare back market exposure during short-term market down trends. Prevent extended declines by moving to Tbills during long-term market down trends.”
These talking points will likely resonate with anyone considering ETFs for inclusion in a portfolio currently, simply based on present market conditions that have persisted since Trump’s election as President last November. The market has clearly been “trending up,” but we have not seen any substantial down trends in the past several months even in the “short term.”
However, those concerned with a potential “correction” or some kind of a sell-off down the road while equities continue to reach for new all-time highs seemingly day after day, would likely take some solace in that these “Smart-Beta” strategies would act defensively in an environment where the current bullish fervor might abate.
How are the portfolio compositions determined day to day, and more importantly over short and longer periods of time? PTLC for instance hones in on the Wilshire U.S. Large-Cap Index (which of course is trading at another new all-time high today), and examines where the index itself is in relation to its 200 day SMA, and then the math and methodology take over.
Depending on where the index is, and trades for five consecutive business days, the portfolio will then adjust from a mix of “all equities,” to “50/50 equity and T-bills” or in a bearish period “all T-bills.”
Other funds in the Pacer family include PTMC (Pacer Trendpilot 450, Expense Ratio 0.60%), PTNQ (Pacer Trendpilot 100, Expense Ratio 0.65%), PTEU (Pacer Trendpilot European Index, Expense Ratio 0.65%), PGHD (Pacer Global High Dividend, Expense Ratio 0.60%), and COWZ (Pacer U.S. Cash COWS 100, Expense Ratio 0.49%).
The Pacer Trendpilot 750 ETF (BATS:PTLC) was trading at $25.71 per share on Wednesday morning, up $0.46 (+1.82%). Year-to-date, PTLC has gained 7.98%, versus a 7.19% rise in the benchmark S&P 500 index during the same period.
PTLC currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #76 of 109 ETFs in the Large Cap Blend ETFs category.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
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