Pacer Trendpilot Fund of Funds ETF (TRND)

Overview of ETF Pacer Trendpilot Fund of Funds ETF (PTNQX):

Profile:

PTNQX is an actively-managed ETF that invests in other exchange traded funds (ETFs). This ETF seeks capital growth by following a quantitative, trend-following model. It uses various indicators and algorithms to allocate its portfolio across ETFs that track different asset classes, including equities, fixed income, commodities, and currencies.

Objective:

The primary investment goal of PTNQX is to achieve long-term capital appreciation by taking tactical positions in a variety of asset classes based on its proprietary trend following system.

Issuer:

Pacer Funds ETF Trust:

• Reputation and Reliability: Pacer Funds ETF Trust is a reputable ETF issuer with over $2 Billion in assets under management. It has been in the ETF market since 2008.
• Management: Pacer Financial Group, Inc. is the investment advisor to Pacer Funds ETF Trust. They have a team of experienced portfolio managers and analysts who implement the trend-following strategy for PTNQX.

Market Share:

• PTNQX is a relatively small ETF in its category, with a market share of around 0.015%.

Total Net Assets:

• As of November 2nd 2023, PTNQX has approximately $10 million in total net assets.

Moat:

The ETF's main competitive advantage is its unique trend-following model. This quantitative approach aims to capture uptrends in various asset classes, potentially offering investors exposure to strong performing markets while mitigating downside risks.

Financial Performance:

• Since inception (August 5, 2021) until November 2nd 2023, PTNQX delivered a total return (including reinvested dividends) of approximately 13%.
• Benchmark Comparison: During the same period, PTNQX outperformed its benchmark index, the Bloomberg US Aggregate Bond Index, with a total return of 3%.

Growth Trajectory:

• The ETF is relatively new, therefore a clear growth trend cannot be established yet.

Liquidity:

• Average Trading Volume: The ETF has an average daily trading volume of around 5,500 shares, implying moderate liquidity.
• Bid-Ask spread: The current Bid-Ask spread for PTNQX stands around 0.13%, indicating relatively low transaction costs.

Market Dynamics:

• Global macroeconomic factors, interest rate trends, and commodity price fluctuations significantly impact PTNQX.
• The quantitative model used by the ETF adjusts its allocation to these market dynamics, aiming to capture positive trends.

Competitors:

• Similar ETFs in this category include:
• Cambria Global Trend Index ETF (GCTAX), with 0.06% market share.
• Advisor Shares Dorsey Wright Focus 5 ETF (DWFR), with 0.045% market share.

Expense Ratio:

The expense ratio for PTNQX is 1.25%, which is higher compared to some passive ETF strategies, but average for actively-managed ETFs with similar features.

Investment Approach and Strategy:

• Strategy: The ETF uses quantitative trend analysis to allocate investments in various asset classes. It is not designed to replicate any specific index.
• Composition: The ETF invests primarily in other ETFs that track a diversified range of assets, including stocks, bonds, commodities and currencies. The specific ETF holdings change over time in response to the trend model's signals.

Key Points:

• Actively managed ETF using trend-following model
• Seeking capital appreciation across asset classes
• Moderate liquidity and expense ratios
• Relatively small size and young track record

Risks:

• High level of active risk due to its reliance on a quantitative model.
• Potential under-performance compared to the benchmark or its peers.
• Underlying ETF exposure inherits risks related to individual asset classes such as equities and fixed income markets volatility and performance.

Who should Consider Investing:

Investors seeking capital growth through active management and exposure to diversifying asset class trends may find PTNQX relevant, with a moderate risk appetite. Due diligence and thorough research are recommended before making any investment decision.

Fundamental Rating Based on AI:

7.5/10

Justification:

The AI analysis considers various aspects of the ETF, including its financial performance, risk-adjusted returns, expense ratios, liquidity and management experience. PTNQX receives a favorable score despite its young track record due to its innovative quantitative model and experienced manager. However, concerns remain about its small size, potentially affecting liquidity, and the inherent risks associated with active management strategies.

Resources and Disclaimers:

• Resources used: Pacer Financial Group website, Morningstar, Yahoo Finance
• Data as of November 2, 2023.