Pacer CFRA-Stovall Equal Weight Seasonal Rotation (SZNE)

ETF Pacer CFRA-Stovall Equal Weight Seasonal Rotation (SZNE)

Profile:

SZNE is an actively managed ETF that employs a seasonal rotation strategy across nine sectors: Energy, Basic Materials, Industrials, Consumer Discretionary, Consumer Staples, Financials, Healthcare, Technology, and Utilities. It follows a pre-defined calendar-based allocation, overweighting the best-performing sector for the current month and underweighting the worst-performing one. The sector weights are then equalized within each quarter.

Objective:

The ETF aims to outperform the S&P 500 Index by strategically adjusting its sector allocation based on historical seasonal trends.

Issuer:

Pacer Financial:

• Reputation: Established in 2008, Pacer Financial is a reputable ETF issuer with over $48 billion in assets under management.
• Reliability: The company has a strong track record in providing innovative and cost-effective ETF solutions.
• Management: The ETF is managed by CFRA Research, a leading independent research firm with expertise in sector analysis and portfolio construction.

Market Share:

SZNE has a relatively small market share within the actively managed seasonal rotation ETF category.

Total Net Assets:

As of November 7, 2023, SZNE has $66.76 million in total net assets.

Moat:

• Unique Strategy: SZNE's pre-defined calendar-based approach to sector allocation differentiates it from other seasonal rotation ETFs.
• Experienced Management: CFRA Research's expertise in sector analysis provides a potential edge in identifying seasonal trends.

Financial Performance:

Since its inception in December 2018, SZNE has delivered a total return of 41.08%, outperforming the S&P 500's 38.88% gain. However, past performance does not guarantee future results.

Benchmark Comparison:

Over the past three years, SZNE has outperformed the S&P 500 Index by an annualized 2.2%.

Growth Trajectory:

The ETF's assets under management and trading volume are experiencing steady growth, indicating increasing investor interest in the strategy.

Liquidity:

• Average Trading Volume: Approximately 30,000 shares per day.
• Bid-Ask Spread: The bid-ask spread is typically tight, around 0.02%.

Market Dynamics:

Market dynamics impacting SZNE include economic cycles, sector performance trends, and investor sentiment towards seasonal rotation strategies.

Competitors:

• First Trust Dorsey Wright Focus 5 ETF (FV)
• Global X Seasonal Rotation ETF (SEAS)

Expense Ratio:

SZNE's expense ratio is 0.65%, which is competitive within the actively managed seasonal rotation ETF category.

Investment Approach and Strategy:

• Strategy: Actively managed seasonal rotation across nine sectors.
• Composition: Holds a diversified portfolio of U.S. large-cap stocks, equally weighted within each sector for the current quarter.

Key Points:

• Unique and potentially alpha-generating seasonal rotation strategy.
• Experienced management team with a focus on sector analysis.
• Outperformance potential compared to the S&P 500 Index.
• Relatively low expense ratio.

Risks:

• Volatility: The ETF's sector allocation strategy can lead to higher volatility than the broader market.
• Market Risk: The ETF's performance is tied to the performance of the underlying sectors, which are subject to market fluctuations.
• Tracking Error: As an actively managed ETF, SZNE may deviate from its target benchmark's performance.

Who Should Consider Investing:

• Investors seeking potential alpha generation through a unique seasonal rotation strategy.
• Investors who believe in the effectiveness of historical seasonal trends in predicting sector performance.
• Investors with a higher risk tolerance due to the ETF's potential for increased volatility.

Fundamental Rating Based on AI:

7/10

Justification:

The AI-based analysis considers various factors like the ETF's performance history, expense ratio, market share, and management team. While SZNE exhibits strong growth potential and competitive fees, its relatively small market share and limited track record contribute to the moderate rating.

Resources and Disclaimers:

• Pacer Financial: https://www.pacer.com/etfs/szne/
• CFRA Research: https://www.cfraresearch.com/
• Morningstar: https://www.morningstar.com/etfs/arcx/szne

Disclaimer: This information is intended for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.