Pacer US Export Leaders ETF retains its Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in quality exposure and yield exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent organization is industry standard, albeit with some strong attributes like overall reasonable fees and a high success ratio across its product shelf. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Alphabet

Weatherford International PLC

Westinghouse Air Brake Technologies

Bunge

Royal Caribbean Cruises

Amphenol

Archer-Daniels-Midland Company

Skechers U.S.A.

Exxon Mobil

MACOM Technology Solutions Holdings

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Pacer US Export Leaders ETF earns a High Process Pillar rating. The predominant contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Respectable risk-adjusted performance also supports the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. The parent firm's five-year risk-adjusted success ratio of 69% supports the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their impressive success ratio suggests that this firm does well for investors and that this fund may benefit from that.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the total return performance, before fees and expenses, of the Pacer US Export Leaders Index (the "index").  The fund invests at least 80% of its total assets (exclusive of collateral held from securities lending) in the component securities of the index. The index uses an objective, and rules-based methodology to measure the performance of an equal weight portfolio of approximately 100 large- and mid-capitalization U.S. companies with a high percentage of foreign sales and high free cash flow growth. Free cash flow is a company's cash flow from operations minus its capital expenditures. 

 The portfolio is overweight in technology and basic materials relative to the category average by 11.6 and 5.4 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 10.2 and 8.9 percentage points of assets, respectively. The portfolio is positioned across 102 holdings and is diversified among those holdings. In its most recent portfolio, 12.8% of the fund’s assets were concentrated in the top 10 fund holdings, as opposed to the category’s 26.1% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 74% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

High

Process

Pacer’s team earns a Below Average People Pillar rating. The team is supported by its parent firm's five-year success ratio of 69%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. However, the rating is weakened by the instability of talent across its parent firm. The firm's asset-weighted manager tenure of seven years suggests it could do more to retain portfolio managers. The turnover of its management team also limits the team. The fund last saw a manager change two years ago.

Below Average

People

Pacer's track record as a steward is mixed, leading to an Average Parent Pillar rating. One notable advantage of Pacer is its below-average fees. On average, the firm's open-end and exchange-traded fund fees fall in the second-lowest quintile of category peers. The product lineup at Pacer has exhibited exemplary durability compared with peer asset managers when looked at over the past five years. Notably, its five-year risk-adjusted success ratio stands at 69%, meaning that 69% of its products have both survived and beaten their respective category median on a risk-adjusted basis. Portfolio management turnover at Pacer is higher than at peer firms, detracting from the overall assessment of the firm's stewardship. Turnover in the portfolio-management ranks can happen for a number of reasons, including mergers and liquidations, portfolio managers moving into other roles, or portfolio managers leaving the firm. In some cases, such change may not signal a serious or immediate problem at the firm, but can still be disruptive for investors, hinder the effectiveness of a firm’s investment processes, or suggest a weaker investment culture.

Average

Parent

Pacer US Export Leaders ETF

PEXL tracks an equally-weighted index of large- and mid-cap US stocks selected based on foreign sales and free cash flow growth.

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News for Pacer US Export Leaders ETF ETF (PEXL)