Holiday season shopping will boost INDS, says Pacer ETFs' O’Hara
Just in time to start thinking about holiday shopping, Sean O'Hara, President of Pacer ETF Distributors reminds us that the world’s increasing reliance upon online shopping means potential growth for his industrial real estate ETF, INDS.
Pacer writes that be it e-commerce or brick-and-mortar, holiday sales are on track to surpass 2019's peak of USD729 billion. Companies like Amazon are already gearing up, who pledged to hire 100,000 new employees to compensate for high delivery demand.
The three-year old ETF, with USD122 million under management, offers, he says, an opportunity to capitalise on the industrial real estate that makes holiday shopping possible, such as warehouses and other core components of the supply chain like last-mile delivery.
O’Hara says: “As we all transition to more and more online retail shopping, the products and goods and services we purchase are going to be delivered to us via Amazon or something like that and likely they will wind up going through two or three distribution centres.
“What the virus has done is it has accelerated the amount of commerce that is being done on these ecommerce platforms. There was 400 million square feet of additional distribution in order to keep up with the demand prior to Covid and that is now at 1 billion square feet.”
Pacer offers real estate ETFs which capture both the industrial side of the business in INDS and SRVR which is invested in growing data centres.
“We were fortunate to identify places where there is opportunity to invest alongside these current trends,” O’Hara says. The audience for the ETF includes financial advisers who are trying to reposition client portfolios who own real estate already.
If we are going to be in a second phase of lockdown, you don’t want to be long traditional real estate like shopping malls or offices,” O’Hara says.
“There is not much yield in the fixed income world at the moment and this ETF can offer an attractive dividend which makes it appealing.”
Pacer has some USD5.6 billion in assets under management. Among other products, they offer the trend following Trendpilot range, designed to offer participation in the market when it is trending up, to pare back exposure when the market experiences short term reversals and to switch to Treasury Bills during long term market downturns.
“Trendpilot did pretty well on one half of the equation during the early 2020 market volatility,” O’Hara says. “It got out prior to the bottom so there was some downside risk management but the market recovered so quickly we missed a lot of the bounce off the bottom. We have made an enhancement to the methodology to try and deal with that with an emergency valuation trigger, but if you own this as part of your core equity for downside risk management, it did its job well.”
PTBD, the fixed income version, did: “A very good job of being in high yield and then moving into Treasuries when the crisis hit, so it’s up about 7 or 8 per cent year to date with a 6 per cent yield’ O’Hara says.