Pacer American Energy Independence ETF retains its Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and an overweight in liquidity exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high liquidity exposure is rooted in stocks with higher trading volumes, lending managers more flexibility. 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 affordable fees and a high success ratio across its product shelf. This earns the firm an Average Parent Pillar rating.

Analyst Rating

Williams

ONEOK

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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 American Energy Independence ETF earns a High Process Pillar rating. The primary 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. Excellent risk-adjusted performance also contributes to 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% reinforces 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 performance, before fees and expenses, of the American Energy Independence Index.  The Advisor attempts to invest all, or substantially all, of its assets in the component securities that make up the index. The index uses a proprietary, and rules-based methodology to measure the performance of a portfolio of U.S. and Canadian exchange-listed equity securities of companies that generate a majority of their cash flow from certain qualifying "midstream" energy infrastructure activities. The fund is non-diversified. 

 The portfolio is overweight in energy by 4.4 percentage points in terms of assets compared with the category average, and its consumer defensive allocation is similar to the category. The sectors with low exposure compared to category peers are utilities and basic materials, with utilities underweighting the average portfolio by 3.6 percentage points of assets and basic materials similar to the average. The portfolio has 29 holdings and is similarly diversified as peers, with 59.3% of portfolio assets concentrated within the top 10 holdings.

High

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 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 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 American Energy Independence ETF

USAI tracks an index of US and Canadian MLPs involved in midstream energy infrastructure.

Pacer American Energy Independence ETF offers exposure to midstream energy companies in the US and Canada, providing a less volatile and higher-yielding alternative to traditional energy ETFs. With a dividend yield of around 6.4%, USAI's focus on midstream companies ensures a stable income stream, making it an attractive option for investors amid economic uncertainty. Despite a higher expense ratio of 0.75%, the unique selection criteria and exposure to the midstream energy industry justify the cost.

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News for Pacer American Energy Independence ETF ETF (USAI)