Pacer ETFs, known for their rules-based, strategy-driven offerings, has launched their October additions to the Pacer Swan SOS ETF group: the Pacer Swan SOS Conservative (October) ETF (PSCQ), the Pacer Swan SOS Moderate (October) ETF (PSMO), and the Pacer Swan SOS Flex (October) ETF (PSFO). The ETFs have a specific set of caps and buffers that have a 12-month target-outcome duration, according to the press release.
The Pacer Swan SOS ETF family was created in December of 2020 and aim to give investors exposure to market growth up to a predetermined cap, and they simultaneously offer downside protection via buffers in case of a down cycle within markets. Every ETF in the series has different outcome strategies, giving investors the opportunity to invest with the risk parameters that they want.
“While markets in 2021 have managed to surprise on the upside, the remainder of the year presents several challenges that could lead to excess volatility,” says Pacer ETFs Distributors’ president, Sean O’Hara. “The Pacer Swan SOS series was designed to address that volatility and grow investor capital while managing risk, an ideal approach in the current market environment.”
The October Additions
The Pacer Swan SOS Conservative (October) ETF (PSCQ) seeks to match returns of the SPDR S&P 500 ETF Trust by investing in Flexible Exchange Options (FLEX Options) using a structured outcome strategy. The fund will participate in upside movement up to a cap of 7.56% before fees and expenses and 6.81% after fees and expenses. The buffer is 5–30%, meaning that the fund reflects any losses of the underlying ETF up to 5%, but caps losses at that percentage before fund fees and expenses. If the underlying ETF loses more than 30%, the fund is set to experience losses that are 25% less than whatever the underlying ETF experiences before fund fees and expenses.
The Pacer Swan SOS Moderate (October) ETF (PSMO) seeks to match returns of the SPDR S&P 500 ETF Trust by investing in Flexible Exchange Options (FLEX Options) using a structured outcome strategy. The fund will participate in upside movement up to a cap of 9.07% before fees and expenses and 8.32% after fees and expenses. The buffer is 15%, and if this fund declines up to 15%, returns will be flat before fees and expenses. If the underlying ETF loses more than 15%, the fund is protected for the first 15% of loss and then experiences a one-to-one loss of the underlying ETF.
The Pacer Swan SOS Flex (October) ETF (PSFO) seeks to match returns of the SPDR S&P 500 ETF Trust by investing in Flexible Exchange Options (FLEX Options) using a structured outcome strategy. The fund will participate in upside movement up to a cap of 12.98% before fees and expenses and 12.23% after fees and expenses. The full buffer is 20%, meaning that if this fund declines up to 20%, returns will be flat before fees and expenses. The fading buffer is 20%–40%, meaning that if the underlying ETF loses more than 20% but less than 40%, the fund is set to experience losses that approach and ultimately match the underlying ETF’s losses. In this percentage bracket, a fund can incur losses over an investment period that grow faster than the underlying ETF’s losses. Any losses beyond 40% are reflected in a one-to-one ratio.
All of the funds carry an expense ratio of 0.75%.
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