Pacer ETFs has acquired the American Energy Independence ETF (USAI US) from midstream energy infrastructure asset manager SL Advisors.
Sean O’Hara, President of Pacer ETFs Distributors.
The fund, which was launched on NYSE Arca in December 2017 and currently houses $10 million in assets under management, offers passive exposure to North American companies providing infrastructure supporting US energy supplies.
According to Pacer, the ETF offers investors a play on the continuing strength of US oil and natural gas production with analysts anticipating the country to account for 20% of new global oil and 25% of natural gas through 2025.
The fund obtains its exposure by tracking the American Energy Independence Index which consists of US and Canadian midstream energy infrastructure companies, C-corps, master limited partnerships (MLPs), as well as general partners of MLPs.
Eligible companies must have market capitalizations above $500m and generate a majority of their cash flow from qualifying midstream energy infrastructure activities. These include gathering and processing; compression; fractionation; logistics; pipeline transportation; storage and terminaling of oil, gas, natural gas liquids, and refined products; liquid natural gas facilities; renewable energy transmission; and storage infrastructure.
The following activities are not qualifying: refining, shipping, exploration, production, retail distribution, coal-related activities, power generation, and oil services.
US and Canadian midstream companies are assigned a collective weight of 80% with US MLPs accounting for the remaining weight. Within each category, constituents are weighted by free-float market capitalization. Rebalancing occurs on a quarterly basis.
Following the incorporation of the ETF by Pacer, the fund has been renamed to the Pacer American Energy Independence ETF. Its ticker code, listing venue, and expense ratio (0.75%) all remain unchanged.
Sean O’Hara, President of Pacer ETFs Distributors, commented, “Our priority remains providing best-in-class investment options, which is why we continue to seek investment opportunities we think demonstrate long-term potential. We see the midstream energy infrastructure sector as a market with tremendous opportunity.”
Joe Thomson, Founder and President of Pacer Financial, added, “Pacer’s growing success is a reflection of our steadfast dedication to quality while ensuring that our fund offerings meet the evolving needs of investors. This acquisition marks another milestone as we draw closer to the end of an excellent year for the firm. We look forward to continuing that success in 2020 and bringing new and exciting opportunities to our investors and partners.”
The fund complements Pacer’s three thematic real estate sector ETFs that target infrastructure development opportunities in commercial retail, industrial e-commerce, and data management.