Pacer Trendpilot™ US Large Cap ETF retains its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The team managing this passive strategy earns a Below Average People Pillar rating. The strategy's parent firm has some investor-friendly attributes, like overall attractive fees and a favorable lineup success ratio. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

Microsoft

Apple

NVIDIA

Amazon

Alphabet

Berkshire Hathaway Inc. - Ordinary Shares - Class B

Eli Lilly

Broadcom

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Pacer Trendpilot™ US Large Cap ETF earns an Above Average Process Pillar rating. The primary contributor to the rating is that this fund tracks an index. Historical data, like 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 respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited 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 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 Large Cap 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, rules-based methodology to implement a systematic trend-following strategy that directs exposure (i) 100% to the S&P 500® Index, (ii) 50% to the S&P 500 and 50% to 3-Month U.S. Treasury bills, or (iii) 100% to 3-Month U.S. Treasury bills, and depending on the relative performance of the S&P 500 and its 200-business day historical simple moving average. 

 The portfolio is overweight in technology by 2.8 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and financial services; however, the allocations are similar to the category. The portfolio is composed of 506 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 32.2% of the fund’s assets were concentrated in the top 10 fund holdings, as opposed to the category’s 48.8% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 1% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Pacer’s team receives a Below Average People Pillar rating. The team benefits from its parent firm's five-year success ratio of 69%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. However, the rating is weakened by the instability of management 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 holds the rating 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 Large Cap ETF

PTLC tracks an index that allocates to a proprietary US large-cap index and/or 3-month US T-bills, according to momentum.

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