New ETF Switches Between Bond Exposures

Yesterday, Pacer rolled out an ETF that switches between bond index exposures. The Pacer Trendpilot US Bond ETF (PTBD) is the latest addition to the issuer’s Trendpilot family, which implements trend-following strategies.

The fund comes with an expense ratio of 0.60% and lists on the NYSE Arca.

PTBD has three allocations that it switches between based on a metric referred to as the risk ratio, which is the value of the S&P U.S. High Yield Corporate Bond Index divided by the value of the S&P U.S. Treasury Bond 7-10 Year Index. The fund allocates between those two indexes based on where the risk ratio is relative to its 100-day moving average, according to the prospectus.

When the risk ratio is above its 100-day moving average for five consecutive trading days, the fund allocates all its weight to the high-yield index. When the risk ratio is below its 100-day moving average for five consecutive trading days, the fund allocates between the two indexes. And when the risk ratio itself closes below its own 100-day moving average for five consecutive trading days, it allocates fully to the Treasury bond index, the document says.

PTBD is the seventh addition to Pacer’s Trendpilot family. The largest of the Trendpilot funds is the Pacer Trendpilot U.S. Large Cap ETF (PTMC), with $2.7 billion in assets under management.

Contact Heather Bell at [email protected]