This Unique Mid Cap ETF Could Outperform Again In 2017
Earlier this week, we spoke about noticeable outflows in several U.S. Mid-Cap Equity funds as we head into the final days of trading in 2016.
Specifically, we mentioned VO (Vanguard Mid-Cap, Expense Ratio 0.09%) and IJJ (iShares S&P Mid-Cap 400 Value, Expense Ratio 0.27%) which gave us reason to investigate a related, but relatively under-covered fund in this Mid-Cap space.
PTMC (Pacer Trendpilot 450 ETF, Expense Ratio 0.60%) debuted in June of 2015, and has a notable over $210 million in assets under management presently, a good figure considering it has only traded live for about a year and a half. When we delve into fund literature, we see that the “450” has significance in the fact that the fund tracks the “Pacer Wilshire U.S. Mid-Cap Trendpilot Index,” which itself tracks 450 individual equity securities in the Mid-Cap space.
For comparative purposes, the S&P Mid-Cap 400, as its name implies, and related tracking ETFs like MDY (SPDR S&P Mid-Cap 400, Expense Ratio 0.25%) and IJH (iShares Core S&P Mid-Cap, Expense Ratio 0.07%) tracks 400 individual equity names, and the CRSP U.S. Mid-Cap Index that the popular VO tracks only holds 351 individual Mid-Cap names presently.
Fund literature further states the nuts and bolts behind the “Trendpilot Strategy” which is present throughout the Pacer lineup of ETPs, not just PTMC. Key takeaways that we see include “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 T-bills during long-term market down trends. There are three components (Equity Indicator, 50/50 Indicator, and T-Bill Indicator) to the Trendpilot strategy, all integrally involving the 200 day SMA.
The underpinning concept here as it relates to “Trendpilot” is that when the 200 day SMA in the underlying index (in this case the Wilshire U.S. Mid-Cap) closes above or below this level for five consecutive business days that the strategy takes action and either goes “all-in” equity in the case of a close above, or “50-50” in the case of a close below.
In what seems like a built in “defense” against a whipsaw move in the market around the 200 day SMA level, the methodology will not go 100% to T-bills unless the “200 day SMA closes lower than its value from five business days earlier.”
Pacer Trendpilot 450 ETF (BATS:PTMC) was trading at $26.70 per share on Friday afternoon, down $0.02 (-0.07%). Year-to-date, PTMC has gained 15.24%, versus a 10.96% rise in the benchmark S&P 500 index during the same period.
PTMC currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #23 of 26 ETFs in the Mid Cap Blend ETFs category.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
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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