In an extended bull market, market participants should be prepared for sudden shifts and the potential bear around the corner. As investors consider ways to better manage risks ahead, consider a risk mitigation strategy and an alternative investment to provide a portfolio with a defensive positioning.

In the upcoming webcast, Don’t Predict the Next Market Decline, Prepare for It, Sean O’Hara, President, Pacer ETFs, will outline what usually happens at the end of a bull market, look to defensive investment options and define an allocation strategy for 2020.

For example, Pacer Financial Inc. offers a suite of so-called Pacer Trendpilot ETFs, including the Pacer Trendpilot US Large Cap ETF (BATS: PTLC), Pacer Trendpilot US Mid Cap ETF (BATS: PTMC) and Pacer Trendpilot 100 ETF (BATS: PTNQ).

A trend following strategy could diminish draw downs during bearish market conditions to help improve the overall, long-term investment returns. The Pacer Trendpilot strategy basically tries to participate in the market when it is trending up, pare back market exposure during the short-term market down trends, and prevent extended declines by moving to T-bills during long-term market down trends.

Specifically, the strategy follows strict guideline with three indicators, including an equity indicator, 50/50 indicator and a T-bill indicator.

The Equity Indicator refers to when the Benchmark Total Return Index closes above its 200-day SMA for five consecutive business days, the exposure will be 100% to the Benchmark Index. From the equity position, the Index will change to the 50/50 position or the T-Bill position depending on the 50/50 Indicator and the T-Bill Indicator.

The Price Signal 50/50 Indicator refers to when the Benchmark Total Return Index closes below its 200-day SMA for five consecutive business days, the exposure will be 50% to the Benchmark Index and 50% to 3-Month US Treasury bills. From the 50/50 position, the Trendpilot Index will return to the equity position or change to the T-Bill position depending on the Equity Indicator or T-Bill Indicator.

Lastly, the Trend Signal T-Bill Indicator refers to when the Benchmark Total Return Index’s 200-day SMA closes lower than its value from five business days earlier, the exposure will be 100% to 3-Month US Treasury bills. From the T-Bill position, the Trendpilot Index will change to the equity position when the Equity Indicator is triggered. It will not return to its 50/50 position unless the Equity Indicator is first triggered.

Financial advisors who are interested in learning more about defensive investment strategies can register for the Tuesday, December 10 webcast here.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.