Pacer Trendpilot Fund of Funds ETF (ARCA: TRND)

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Pacer Trendpilot Fund of Funds ETF

Many investors implement some sort of technical analysis in their decision-making process when entering or exiting a position. This may include looking at a chart to spot historical support and resistance points or examining moving averages as key guideposts. &nbsp;

	While mastering technical signals can be difficult, one suite of exchange-traded notes takes the guesswork out of following the trends of the market. &nbsp;

	Related: <a href="http://www.benzinga.com/etfs/sector-etfs/14/08/4775391/earnings-season-is-the-right-prescription-for-health-care-etfs">Earnings Season Is The Right Prescription For Healthcare ETFs</a>

	The RBS U.S. Large Cap Trendpilot ETN (NYSE: <a class="ticker" href="/stock/trnd#NYSE">TRND</a>) follows a systematic method of being long the S&amp;P 500 Total Return Index when the market is above its 200-day moving average and in three-month U.S.Treasury bills when it is below. &nbsp;

	Simply put, this ETN seeks to avoid large drops in stocks by moving to the safety of cash when the market falls below its long-term moving average for five consecutive days. TRND will then reallocate back to stocks when the market has traded back above this key trend line for another five consecutive days.
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	The allowance for multiple consecutive days of trading above or below the trend line is likely to help avoid whipsaws or bad pricing data that can negatively impact performance.

	Currently, this ETN has more than $340 million in total assets and charges an expense ratio of 1.00 percent. It&rsquo;s also worth noting that investor fees are reduced to 0.50 percent when the portfolio is tracking cash.
<h3>
	Paying A Premium</h3>

	Those fees are in stark contrast to the 0.05 percent expense ratio of the Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/voo#NYSE">VOO</a>), which tracks the same underlying index of stocks. However, investors in TRND are paying a premium for the ability to avoid significant draw downs and bear markets that can weigh on total return.

	The advantage of the strategy implemented in TRND is that emotions and predictions are removed from the equation. This allows for a seamless transition between cash and stocks that is implemented according to a strict rules-based methodology.
<h3>
	The Trend Is Your Friend</h3>

	In addition to large-cap stocks, RBS has also implemented a trend following approach for several other key indexes as well. Some examples include: RBS Gold Trendpilot ETN (NYSE: <a class="ticker" href="/stock/tbar#NYSE">TBAR</a>), RBS NASDAQ-100 Trendpilot ETN (NYSE: <a class="ticker" href="/stock/tndq#NYSE">TNDQ</a>), and RBS Mid Cap Trendpilot ETN (NYSE: <a class="ticker" href="/stock/trnm#NYSE">TRNM</a>).

	These innovative exchange-traded notes may further popularize the old saying that &ldquo;the trend is your friend.&rdquo;

The Royal Bank of Scotland (“RBS”) introduced the fourth member of its Trendpilot line of exchange-traded notes last week (9/15/11).  The RBS Oil Trendpilot ETN (TWTI) is linked to the performance of an index utilizing a systematic trend-following strategy to track oil futures when they are above their 100-day moving average and to provide Treasury Bill returns when oil futures are below their 100-day moving average.
The “Benchmark Index” hypothetically constructs an investment in a series of twelve monthly light sweet crude oil (<a class="ticker" href="/stock/wti#">WTI</a>) futures contracts.  A “positive trend” is established when the closing level of the Benchmark Index is at or above its historical 100-day simple moving average for five consecutive days.  A “negative trend” is when it is below its 100-day average for five days.
When oil futures contracts are in a positive trend, TWTI will track their performance minus a 1.10% investor fee.  When oil futures contracts are in a negative trend, TWTI will track the performance of 3-month U.S. Treasury bills minus an investor fee of 0.50%.
While following the same concept as the existing RBS Trendpilot ETNs, TWTI is different in that it uses a 100-day moving average and charges a 1.10% investor fee while in a positive trend.  The three prior products all use 200-day averages and have a 1.00% investor fee.
The three previously released RBS <a href="http://investwithanedge.com/open-letter-to-etn-sponsors" target="_blank">exchange-traded notes (“ETNs”)</a> are:
<ul>
<li><a href="http://investwithanedge.com/rbs-enters-etn-arena-with-timed-sp-500" target="_blank">RBS US Large Cap Trendpilot ETN</a> (<a class="ticker" href="/stock/trnd#">TRND</a>)</li>
<li><a href="http://investwithanedge.com/rbs-introduces-mid-cap-trendpilot-etn" target="_blank">RBS US Mid Cap Trendpilot ETN</a> (<a class="ticker" href="/stock/trnm#">TRNM</a>)</li>
<li><a href="http://investwithanedge.com/tbar-captures-long-term-gold-bar-trends" target="_blank">RBS Gold Trendpilot ETN</a> (<a class="ticker" href="/stock/tbar#">TBAR</a>)</li>
</ul>
Additional information on the new TWTI is located in the <a href="http://usmarkets.rbs.com/EN/Showpage.aspx?pageID=310&amp;ISIN=US78009P1277" target="_blank">summary</a>, <a href="http://usmarkets.rbs.com/MediaLibrary/Document/PDF/ProductDocuments/US78009P1277/US78009P1277_EN_Factsheet.pdf" target="_blank">fact sheet</a> (pdf), and <a href="http://usmarkets.rbs.com/MediaLibrary/Document/PDF/ProductDocuments/US78009P1277/US78009P1277_EN_Prospectus.pdf" target="_blank">prospectus</a> (pdf).
Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
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Timing Oil Futures With TWTI

The Royal Bank of Scotland today (2/22/11) rolled out the third product in its U.S. lineup with the introduction of the RBS Gold Trendpilot ETN (TBAR).  Performance for the new <a href="http://investwithanedge.com/open-letter-to-etn-sponsors" target="_blank">exchange-traded note (<a class="ticker" href="/stock/etn#">ETN</a>)</a> is linked to an index that tracks gold bullion when it is in a long-term uptrend and tracks T-bills when gold is trending down.
To date, all of the RBS Trendpilot ETNs have applied the same long-term market timing approach to different underlying asset classes.  <a href="http://investwithanedge.com/rbs-enters-etn-arena-with-timed-sp-500" target="_blank">RBS US Large Cap Trendpilot ETN</a> (<a class="ticker" href="/stock/trnd#">TRND</a>) times the S&amp;P 500 while <a href="http://investwithanedge.com/rbs-introduces-mid-cap-trendpilot-etn" target="_blank">RBS US Mid Cap Trendpilot ETN</a> (<a class="ticker" href="/stock/trnm#">TRNM</a>) applies it to the S&amp;P MidCap 400 Index.
The timing methodology employed by TBAR is to track gold bullion, as defined by the London PM Fixing Price in USD, when it has been above its 200-day moving average for five consecutive days and to track the return of 3-month Treasury Bills when gold has been below its 200-day moving average for five consecutive days.  A more complete description of the methodology is located in the <a href="http://usmarkets.rbs.com/MediaLibrary/Document/PDF/ProductDocuments/US78009L4077/US78009L4077_EN_Factsheet.pdf" target="_blank">TBAR fact Sheet</a> (pdf).
TBAR, like TRND and TRNM, has a variable investor fee (expense ratio) of 1.00% while it is tracking gold and 0.50% while it is tracking T-Bills.  When held in a taxable account, TBAR should provide significant after-tax performance improvements compared to a do-it-yourself approach of the same timing mechanism applied to a physical gold ETF such as SPDR Gold Trust (<a class="ticker" href="/stock/gld#">GLD</a>).  Both the tax-deferment of the ETN structure plus a tax rate reduction from the “collectables” tax rate of GLD should help.
The downside is that TBAR is an exchange-traded note (<a class="ticker" href="/stock/etn#">ETN</a>), which means it is an unsecured debt obligation of RBS.  Additional information is located in the <a href="http://usmarkets.rbs.com/EN/MediaLibrary/Document/PDF/ETN/GOLD_Trenpilot_Press_Release_FINAL.pdf" target="_blank">press release</a> (pdf), <a href="http://usmarkets.rbs.com/EN/Showpage.aspx?pageID=310&amp;ISIN=US78009L4077" target="_blank">summary page</a>, and the <a href="http://usmarkets.rbs.com/MediaLibrary/Document/PDF/ProductDocuments/US78009L4077/US78009L4077_EN_Prospectus.pdf" target="_blank">prospectus</a> (pdf).  TBAR had zero volume in its trading debut today, so you still have a chance to be the first buyer.
Disclosure covering writer, editor, and publisher:  Long GLD.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.
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