Pacer ETFs, begun trading of 2 new ETFs, the Pacer Trendpilot European Index ETF (BATS: PTEU) and the Pacer Autopilot Hedged European Index ETF (BATS: PAEU) on Thursday, December 17, 2015. Here is a synopsis of the new ETFs:
1.
FUND INFORMATION:
| Symbol: PTEU | Exchange: BATS |
| Name: Pacer Trendpilot European Index ETF | Net Expense Ratio: 0.65% |
FUND OBJECTIVE:
The Pacer Trendpilot European Index ETF is an exchange traded fund that seeks to track the total return performance, before fees and expenses, of the Pacer Trendpilot European Index.
REFERENCE INDEX:
The Pacer Trendpilot European Index uses an objective, rules-based methodology to implement a systematic trend-following strategy that directs exposure:
(i) 100% to the FTSE Eurobloc Index,
(ii) 50% to the FTSE Eurobloc Index and 50% to 3-Month US Treasury bills, or
(iii) 100% to 3-Month US Treasury bills, depending on the relative performance of the FTSE Eurobloc Total Return Index (FTSE Eurobloc TR) and its 200-business day historical simple moving average.
The FTSE Eurobloc Index is a rules-based, float-adjusted, market capitalization-weighted index comprised of large- and mid-capitalization stocks providing coverage of the developed markets in the euro zone, including primarily France, Germany, Spain, the Netherlands, and Italy. The FTSE Eurobloc Index is a subset of the FTSE Global Equity Index Series, which covers 98% of the world’s investable market capitalization. The FTSE Eurobloc TR is a total return version of the FTSE Eurobloc Index and reflects the reinvestment of dividends paid by the securities in the FTSE Eurobloc Index.
The Index, and consequently the Fund, may stay in any of its 3 possible positions for an extended period of time. As described below, the Index will change its position based on the following indicators, and each change will become effective on the second business day after the indicator for the change is triggered.
Equity Indicator. When the FTSE Eurobloc TR closes above its 200-day moving average for 5 consecutive business days (Equity Indicator), the exposure of the Index will be 100% to the FTSE Eurobloc Index, effective on the second business day following the date of the Equity Indicator.
50/50 Indicator. When the FTSE Eurobloc TR closes below its 200-day moving average for 5 consecutive business days (50/50 Indicator), the exposure of the Index will be 50% to the FTSE Eurobloc Index and 50% to 3-Month US Treasury bills, effective on the second business day following the date of the 50/50 Indicator. Following the effectiveness of the 50/50 Indicator, the exposure of the Index may be greater than or less than 50% with respect to the FTSE Eurobloc Index and 3-Month US Treasury bills depending on their respective performance until either the Equity Indicator or T-Bill Indicator (described below) is triggered.
Once the 50/50 Indicator has been triggered, the exposure of the Index will next change to either be 100% to the FTSE Eurobloc Index if the Equity Indicator is triggered or 100% to 3-Month US Treasury bills if the T-Bill Indicator (described below) is triggered, effective on the second business day following the date of the indicator.
T-Bill Indicator. When the FTSE Eurobloc TR’s 200-day moving average closes lower than its value from 5 business days earlier (T-Bill Indicator), the exposure of the Index will be 100% to 3-Month US Treasury bills, effective on the second business day following the date of the T-Bill Indicator.
For example, if today is Wednesday and the FTSE Eurobloc TR’s 200-day moving average closes lower than it did on the fifth preceding business day (Wednesday of the preceding week), the T-Bill Indicator is triggered. Unlike the operation of the Equity Indicator and 50/50 Indicator, the closing values on the days in between today and the fifth preceding business day do not affect whether the T-Bill Indicator has been triggered; rather, the T-Bill Indicator simply compares today’s closing value to the closing value 5 business days earlier.
Once the T-Bill Indicator has been triggered, the exposure of the Index will next change to be 100% to the FTSE Eurobloc Index if the Equity Indicator is triggered, effective on the second business day following the date of the indicator. Once the T-Bill Indicator has been triggered, the Index will not return to its 50/50 position unless the Equity Indicator is first triggered, followed by the 50/50 Indicator being triggered. The Index aims to mitigate, to some extent, the volatility of the FTSE Eurobloc Index by tracking 3-Month US Treasury bills (instead of the FTSE Eurobloc Index) when the FTSE Eurobloc TR is in a negative trend.
Current Exposure (12/15/15):
| T-Bills | 100% |
Useful Links:
PTEU Home Page
Category: Equities> Regions> Europe> Broad Europe> European Strategy
2.
FUND INFORMATION:
| Symbol: PAEU | Exchange: BATS |
| Name: Pacer Autopilot Hedged European Index ETF | Net Expense Ratio: 0.65% |
FUND OBJECTIVE:
The Pacer Autopilot Hedged European Index ETF is an exchange traded fund that seeks to track the total return performance, before fees and expenses, of the Pacer Autopilot Hedged European Index.
REFERENCE INDEX:
The Pacer Autopilot Hedged European Index uses an objective, rules-based methodology:
(i) to invest in the component stocks of the FTSE Eurobloc Index and
(ii) to apply a proprietary currency hedging strategy pursuant to which the Index will be short the euro and long the U.S. dollar during periods when the euro is trending weaker against the U.S. dollar.
The component stocks of the FTSE Eurobloc Index form the equity component of the Pacer Autopilot Hedged European Index. The Index’s proprietary currency hedging strategy is overlayed on top of the equity component.
Equity Exposure. The FTSE Eurobloc Index is a rules-based, float-adjusted, market capitalization-weighted index comprised of large- and mid-capitalization stocks providing coverage of the developed markets in the euro zone, including primarily France, Germany, Spain, the Netherlands, and Italy. The FTSE Eurobloc Index is derived from the FTSE Global Equity Index Series, which covers 98% of the world’s investable market capitalization.
Currency Hedging. During each period when the euro’s 20-day moving average is lower than its 130-day moving average, the Index will, in addition to its equity exposure, track 1-month forward currency contracts, rolled to each subsequent month as applicable, to offset the Index’s exposure to the euro with exposure to U.S. dollars (i.e., short the euro and long the U.S. dollar), known as being “currency hedged”. A forward currency contract is an agreement to buy or sell a specific currency at a future date at a price set at the time of the contract. During each period when the euro’s 20-day moving average is higher than its 130-day moving average, the Index will track only the equity exposure, known as being “currency unhedged”.
The Index may stay “currency hedged” or “currency unhedged” for short or extended periods of time.
Useful Links:
PAEU Home Page
Category: Equities> Regions> Europe> Broad Europe> European Strategy
ETFtrack comment:
About Pacer ETFs: Pacer ETFs, distributed by Pacer Financial, is a new ETF provider that launched in June 2015. Pacer ETFs offers exchange traded funds as tools to help investors diversify their portfolios. They provide a selection of strategy driven ETFs that aim to serve as long-term investment options. As a national wholesaling organization, Pacer Financial has partnered with ETF and ETN providers, including RBS, beginning in 2008. These partnerships allowed Pacer to gain invaluable knowledge and relationships. The entrepreneurial culture and national sales and marketing teams allow Pacer to get to the market quickly and adapt to change in the industry.