Daily ETF Watch: ‘Trendpilot’ Funds Launch

Pacer Financial, a distributor and marketer of financial products to financial advisors, today is launching its first exchange-traded funds—three trend-tracking securities that toggle between equity coverage in rising markets, short-dated Treasurys exposure when markets pull back and a 50/50 blend when markets are in between.

The ETFs, their target indexes and their tickers are as follows:

• Pacer 100 Trendpilot ETF, tracking the Pacer Nasdaq-100 Trendpilot Index. Changes in tracking will be dictated by the price of the ETF moving above or below the 100-day moving average of the index. Its ticker is “PTNQ.”
• Pacer US 450 Trendpilot ETF, tracking the Pacer Wilshire US Mid-Cap Trendpilot Index. Changes in tracking will be dictated by the price of the ETF moving above or below the 200-day moving average of the index. Its ticker is “PTMC.”
• Pacer US 750 Trendpilot ETF, tracking the Pacer Wilshire US Large-Cap Trendpilot Index. Changes in tracking will be dictated by the price of the ETF moving above or below the 200-day moving average of the index. Its ticker is “PTLC.”

The idea behind such Trendpilot ETFs is to ride equity-market bull runs on the way up, while also having a mechanism in place that enables investors to protect profits when markets fall sharply. In more neutral markets, the 50/50 blend of equities and three-month Treasury bills prevails.

The new Pacer funds are not the first of their kind, but are coming in with lower annual expense ratios than an existing lineup of similar—but not identical—products from the Royal Bank of Scotland (RBS).

Not The First Trendpilot ETPs

Indeed, a series of exchange-traded notes (ETNs) issued by RBS have been on the market about four years. Those ETNs are as follows:

• RBS US Large Cap Trendpilot ETN (TRND | B-70)
• RBS US MidCap Trendpilot ETN (TRNM )
• RBS Nasdaq-100 Trendpilot ETN (TNDQ)

Each of the RBS ETNs has an annual expense ratio of 1.00 percent, or $100 for each $10,000 invested.

By comparison, the large- and midcap Pacer “Trendpilot” ETFs have annual expense ratios of 60 basis points, while the Nasdaq-100 Trendpilot ETF has a 65 basis point annual expense ratio.