In today’s stubbornly low interest rate environment, constructing a portfolio for the long haul is incredibly challenging. Advisors have been forced to hunt for yield by taking on more risk. What if there was a way to find yield and keep an added layer of risk mitigation?
In the upcoming webcast, Getting Smart About Income, Sean O’Hara, President, Pacer ETFs, will walk viewers through a trend-following alternative approach to managing fixed income exposure.
The Pacer TrendPilot US Bond ETF (PTBD) provides dynamic market exposure to help investors quickly hedge risks when markets turn volatile. The strategy follows strict guidelines with three indicators, including a high yield indicator, a 50/50 indicator, and a T-bill indicator.
The High Yield Indicator refers to when the Risk Ratio, or the change between the S&P U.S. High Yield Corporate Bond Total Return Index and the S&P U.S. Treasury Bond 7-10 Year Total Return Index, closes above its 100-day simple moving average for five consecutive business days. The exposure is then 100% to the Benchmark Index. The Index will then change to the 50/50 position or the T-Bond position depending on the 50/50 Indicator and the T-Bond Indicator.
The Price Signal 50/50 Indicator refers to when the Risk Ratio closes below its 100-day SMA for five consecutive business days. In that case, exposure will be 50% to the S&P U.S. High Yield Corporate Bond Total Return Index and 50% to S&P U.S. Treasury Bond 7-10 Year Total Return Index. From the 50/50 position, the Trendpilot Index will return to the high yield position or change to the T-Bond position, depending on if the indicators are triggered.
Lastly, the Trend Signal T-Bond Indicator refers to when the Benchmark Total Return Index’s 100-day SMA closes lower than its value from five business days earlier. Here, exposure will be 100% to Treasury bonds. From the T-Bond position, the Trendpilot Index will change to the high yield position when the High Yield Indicator is triggered. It will not return to its 50/50 position unless the High Yield Indicator is first triggered.
Financial advisors who are interested in learning more about income strategies can register for the Wednesday, May 5 webcast here.