Volatile markets are showing investors the value of safe strategies. The Pacer Trendpilot 100 ETF (CBOE: PTNQ). PTNQ can move between being 100% allocated to the Nasdaq-100 Index to allocations to safe T-bills.
PTNQ’s cousins include the Pacer Trendpilot US Large Cap ETF (CBOE: PTLC) and the Pacer Trendpilot US Mid Cap ETF (CBOE: PTMC).
The Pacer ETFs implement a type of trend following strategy that automatically adjusts exposures according to current market conditions. PTLC takes a 100% position in the S&P 500 Index when the benchmark is trading above its 200-day simple moving average for five consecutive days, moves to a 50% position to the large-cap index and 50% 3-month U.S. T-bills when the benchmark falls below its 200-day for five consecutive days, and takes on 100% 3-month US T-Bills if the benchmark closes lower than its value from five business days earlier. PTMC follows the same move between S&P MidCap 400 Index and US T-Bills, and PTNQ follows the similar trend following strategy with the Nasdaq-100 Index.
For PTNQ, “When the NASDAQ-100 Total Return Index closes above its 200 day simple moving average (200 Day SMA) for five consecutive business days, the exposure of the Index will be 100% to the NASDAQ-100 Index. From the equity position, the Index will change to the 50/50 position or the T-Bill position depending on the the 50/50 Indicator and the T-Bill Indicator,” according to Pacer.
It’s Working
Price action suggests PTNQ’s stragtegy is working. While the FAANG stocks have wreaked havoc on the Nasdaq-100, PTNQ is up more than 8% this year and has climbed modestly higher this month.
“Trendpilot’s strategy calls for participating in the market when the trend is up. It will pare back market exposure during short-term downtrends. And to prevent extended declines it will move to T-bills during long-term market downtrends,” reports Investor’s Business Daily.