Pacer Trendpilot US Bond ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as Process offset by weaker spots such as People. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy's effective approach earns a High Process Pillar rating. The strategy's parent firm has some investor-friendly attributes, like overall low fees and a high success ratio across its product shelf. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Pacer Trendpilot US Bond ETF earns a High Process Pillar rating. 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. The main driver of 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. The parent firm's five-year risk-adjusted success ratio of 69% also contributes to the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their compelling success ratio suggests that the firm does well for investors and that this fund may benefit from that. The parent firm's strong risk-adjusted performance, as shown by its average overall Morningstar Rating of 3.3 stars, supports the rating as well.

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 Trendpilot US Bond Index.  The index uses an objective, rules-based methodology to implement a systematic trend-following strategy that directs exposure to one of the following positions: (i) 100% to the S&P U.S. High Yield Corporate Bond Index, (ii) 50% to the S&P U.S. High Yield Corporate Bond Index and 50% to the S&P U.S. Treasury Bond 7-10 Year Index or (iii) 100% to S&P U.S. Treasury Bond 7-10 Year Index, and depending on the “Risk Ratio". Normally at least 80% of the fund's total assets will be invested in the component securities of the index.  

 This strategy has a 6.6% 12-month yield, higher than its average peer's 4.2%. Typically, higher yields come at the cost of higher credit risk.

High

Process

Pacer’s team earns a Below Average People Pillar rating. The team benefits from the strategy's reasonable costs, with fees that rank in its category's middle quintile. However, the rating is held back by the combined average five-year excess return of each manager, which suggests that the funds they manage have fallen short of their respective category average. The turnover of its management team also holds the team back. 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 Trendpilot US Bond ETF

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