Pacer ETFs has launched two actively managed ETFs designed to generate monthly income while seeking reduced downside risk through diversified, laddered portfolios of autocallables.
The Pacer Metaurus High Income Autocallable ETF (NASDAQ:ACBH) and Pacer Metaurus Enhanced Core Income Autocallable ETF (NASDAQ:ACBE) began trading Thursday. Both use portfolios of autocallables linked to the Metaurus US Large Cap VolPath Index, with staggered entry points designed to reduce timing risk.
ACBH uses 70% coupon and maturity barriers, while ACBE has lower 50% barriers, allowing the underlying index to fall further before those protections are lost. Both funds have monthly observation dates, five-year maturities, a six-month initial non-callable period and a coupon-memory feature.
QUICK CONTEXT: Autocallables Move Into ETFs
Autocallables are structured investments that can generate periodic coupons while linking repayment and downside protection to the performance of an underlying asset or index. Their terms can vary significantly, making the timing and structure of an individual investment important to the outcome.
Pacer and Metaurus are packaging the strategy into ETFs with laddered portfolios of autocallables. Instead of relying on one autocallable and a single entry point, the staggered structure is designed to spread exposure across different entry dates and potentially create a more consistent income stream.
The two new ETFs also offer different levels of downside buffers. ACBH’s 70% barriers mean the relevant index must remain at or above 70% of its initial level for the applicable coupon or principal protection conditions to hold. ACBE’s 50% barriers provide more room for an underlying decline before those protections are lost.
The launch expands the Pacer-Metaurus partnership beyond dividend-multiplier ETFs such as QDPL (Pacer Metaurus US Large Cap Div Multiplier 400 ETF) and QSIX (Pacer Metaurus Nasdaq 100 Div Multiplier 600 ETF) into the growing market for income-oriented structured strategies.
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