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.