Market Overview

Pacer Expands Cash Cows, Trendpilot ETF Lineups

Pacer Expands Cash Cows, Trendpilot ETF Lineups

Pacer ETFs, the exchange traded funds issuer behind a unique lineup of income-generating, trend following and real estate strategies, added to its Cash Cows and Trendpilot lineups last week with the launches of two funds.

What Happened

The Pacer US Cash Cows Growth ETF (NYSE:BUL) is Pacer's latest addition to its lineup of Cash Cows ETFs, a group of funds focusing on stocks with high free cash flow yields. BUL screens “the S&P 900 Pure Growth Index for the top 50 companies based on free cash flow yield,” according to Pacer.

The new ETF focuses on domestic large caps with ample amounts of free cash flow because companies with that generate large amounts of free cash can, over time, provide significantly better returns with more attractive risk-reward prospects than financially strained companies. BUL's underlying index has a free cash flow yield of 5.16 percent compared to 2.63 percent on the S&P 900, according to Pacer data.

BUL's index allocates 31.6 percent of its weight to the technology sector and a combined 35.76 percent of its weight to the industrial and healthcare sectors.

Why It's Important

The Pacer Trendpilot International ETF (NYSE:PTIN) is the newest addition to the firm's Trendpilot series. PTIN tracks the Pacer Trendpilot International Index. Pacer's Trendpilot ETFs use “trend following to alternate exposure between equities and T-Bills,” according to the issuer.

PTIN, like the other Trendpilot ETFs, can be 100 percent allocated to stocks, have a 50/50 mix of equities and T-Bills or be 100 percent allocated to 3-month T-Bills.

The weighted average market value of PTIN's components is $71.70 billion. Financial services is the new ETF's largest sector allocation at nearly 21.50 percent. The industrial and consumer staples sectors combine for over a quarter of PTIN's roster.

PTIN reduces equity exposure when the S&P Developed Ex-US Large Cap Local Currency Total Return Index closes below its 200-day simple moving average for five consecutive days.

PTIN charges 0.65 percent per year, or $65 on a $10,000 investment, while BUL has an annual fee of 0.60 percent. As of May 2, Pacer had $4.30 billion in ETF assets under management.

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