Pacer adds active floating rate ETF

Oct 26th, 2021 | By | Category: Fixed Income

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Pacer has extended its ETF offering by bolting on an actively managed floating rate ETF acquired from global investment manager Pacific Asset Management.

Sean O’Hara, President of Pacer ETFs Distributors

Sean O’Hara, President of Pacer ETFs Distributors.

The Pacer Pacific Asset Floating Rate High Income ETF (FLRT US) is listed on NYSE Arca and has nearly $40 million in assets under management.

The fund has been renamed from the Pacific Global Senior Loan ETF, an ETF that was itself created by re-organizing the AdvisorShares’ Pacific Asset Enhanced Floating Rate ETF in January 2020.

Pacific Asset Management, in its new role as sub-adviser, will continue to manage the ETF’s portfolio using an expanded investment mandate.

The fund previously invested exclusively in secured and unsecured senior loans issued in US dollars by non-investment-grade companies globally.

Senior loans are made by financial institutions to companies that are generally considered to have low credit quality. They have greater seniority in the issuer’s capital structure, taking priority over other unsecured or otherwise more junior debt.

The fund will now also invest in other adjustable-rate securities including applicable collateralized loan obligations, high-yield bonds, asset-backed securities, and commercial mortgage-backed securities.

The fund may appeal to yield-hungry investors who are concerned about duration risk. Its 30-day SEC yield is currently 3.00%, and its effective duration is just 0.54 years.

It comes with a reduced expense ratio of 0.60%, down from its original price tag of 0.68%.

Sean O’Hara, President of Pacer ETFs Distributors, said: “Through the addition of FLRT, we hope to provide a unique fixed income strategy to advisors who are seeking an attractive solution in a yield-starved environment, especially one designed for a rising-rate world.”

Joe Thomson, Founder and President of Pacer Financial, added: “We are pleased to work with Pacific Asset Management to enhance the fund’s strategy and deliver a unique ETF to a wider audience of advisors and investors.”

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