Pacer Pacific Asset Floating Rate High Income ETF (FLRT)

Overview

The Pacer Pacific Asset Floating Rate High Income ETF ( cujo) seeks to provide current income and capital appreciation by investing in a diversified portfolio of floating rate instruments, primarily senior secured loans issued by U.S. corporations. The ETF focuses on the high-yield segment of the floating rate loan market, aiming for attractive income generation with a strategy designed to mitigate interest rate risk due to the floating nature of its underlying holdings.

Reputation and Reliability

Pacer ETFs is known for its innovative ETF strategies and has a growing presence in the ETF market. Pacific Asset Management serves as the sub-advisor, bringing specialized expertise in credit analysis and fixed income management.

Management Expertise

Pacific Asset Management has a dedicated team with extensive experience in managing floating rate loan portfolios, focusing on rigorous credit research and active risk management to navigate the complexities of the credit markets.

Goal

The primary investment goal of CUJO is to generate high current income for its investors by investing in floating rate debt securities.

Investment Approach and Strategy

Strategy: CUJO does not aim to track a specific index. It is an actively managed ETF that seeks to identify and invest in floating rate senior secured loans.

Composition The ETF primarily holds senior secured floating rate loans, which are typically issued by U.S. corporations. These loans are characterized by their variable interest rates, which adjust periodically based on a benchmark rate plus a spread.

Market Share: Precise market share data for CUJO within the specific floating rate loan ETF sector is not readily available and fluctuates. As an actively managed ETF, its market share is influenced by its performance and investor demand.

Total Net Assets (AUM): 322200000

Key Competitors

• Invesco Senior Loan ETF (BKLN)
• SPDR Blackstone Senior Loan ETF (SRLN)
• Credit Suisse AG / Credit Suisse Asset Management U.S. Floating Rate High Yield ETF (CSFL)

Competitive Landscape

The floating rate loan ETF market is competitive, dominated by a few large players. CUJO's advantages lie in its active management approach, aiming to select loans with attractive risk-reward profiles, and its focus on senior secured debt for a degree of capital protection. However, it faces competition from larger, more established ETFs with greater liquidity and potentially lower expense ratios. The active nature also means its performance can diverge significantly from passive peers.

Historical Performance: Historical performance data for CUJO shows a mix of returns influenced by credit market conditions and interest rate environments. Over the past year, its performance has been subject to the broader economic climate impacting corporate debt. Specific annualized returns for various periods are best sourced from real-time financial data providers.

Benchmark Comparison: As an actively managed ETF, CUJO does not precisely track a specific benchmark. Its performance is typically compared against relevant floating rate loan indices or peer group averages. Its effectiveness is gauged by its ability to outperform these benchmarks after fees.

Expense Ratio: 0.75

Average Trading Volume

The average daily trading volume for CUJO is sufficient for most retail investors, indicating moderate liquidity.

Bid-Ask Spread

The bid-ask spread for CUJO is generally tight enough to not be a significant barrier for most investors, reflecting adequate market depth.

Market Environment Factors

CUJO is significantly influenced by interest rate policies, inflation expectations, and the overall health of the U.S. corporate credit market. Economic slowdowns or recessions can lead to increased defaults, impacting the value of its underlying loans. Conversely, rising interest rates can benefit floating rate instruments by increasing their income yield.

Growth Trajectory

The growth trajectory of CUJO is tied to investor demand for yield in a potentially rising interest rate environment. Its strategy of focusing on senior secured loans offers a defensive component in volatile credit markets, which could attract investors seeking income with a degree of capital preservation. Changes to strategy or holdings would be driven by the sub-advisor's ongoing credit analysis.

Competitive Edge

CUJO's competitive edge stems from its active management by Pacific Asset Management, which focuses on rigorous credit selection and risk mitigation within the floating rate loan space. The ETF's emphasis on senior secured loans provides a layer of protection compared to more subordinated debt. Its strategy is designed to adapt to changing interest rate environments, offering potential advantages during periods of rate hikes where floating rate instruments typically perform well.

Volatility

CUJO's historical volatility is generally lower than that of high-yield corporate bond ETFs, owing to the floating rate nature of its underlying assets which reduces sensitivity to interest rate changes. However, it is still subject to credit risk and market volatility.

Market Risk

The primary market risks for CUJO include credit risk (the possibility of borrowers defaulting on their loan obligations), interest rate risk (though mitigated by floating rates, significant shifts can still impact value), and liquidity risk, especially in stressed market conditions where the market for loans can dry up.

Ideal Investor Profile

The ideal investor for CUJO is one seeking to generate a higher level of current income than traditional fixed-income investments, and who is comfortable with the credit risks associated with corporate loans. Investors looking for a potential hedge against rising interest rates may also find it suitable.

Market Risk

CUJO is best suited for investors seeking a steady income stream and willing to accept moderate credit risk. It can serve as a component in a diversified income-focused portfolio and is more appropriate for those with a medium-term to long-term investment horizon rather than short-term traders.

The Pacer Pacific Asset Floating Rate High Income ETF (CUJO) is an actively managed ETF focused on generating high current income through investments in senior secured floating rate loans. Its active management by Pacific Asset Management aims to provide robust credit selection and risk management, with a strategy that offers some protection against rising interest rates. While facing competition in the loan ETF space, its focus on senior secured debt and income generation makes it a potentially attractive option for income-seeking investors with a moderate risk tolerance.

Data Sources:

• Pacer ETFs Official Website
• Financial Data Providers (e.g., Morningstar, ETF.com, Bloomberg)

Disclaimers:

This information is for educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should consult with a qualified financial advisor before making any investment decisions. Data points like market share and AUM are subject to change.