A $5.9B-AUM ETF Shop Buys Twice
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Friday, January 24, 2020

A $5.9B-AUM ETF Shop Buys Twice

An ETF shop recently made its first two acquisitions, and they're open to doing more.

Sean Edward O'Hara
Pacer ETFs Distributors / Pacer Financial
President / Director
"There are a lot of ETFs in the market that don't have a lot of focus on sales and marketing and distribution that are having a hard time gathering assets," Sean O'Hara, president of Pacer ETFs Distributors, tells MFWire. "We certainly look at everything."

O'Hara confirms that this week Pacer sealed its second deal, adopting the CSOP FTSE China A50 ETF (AFTY) from CSOP Asset Management. And last month Pacer seal its first deal, adopting the American Energy Independence ETF (USAI) from SL Advisors. The pricing and terms of the deals were not disclosed, but no investment banks or consultants were involved, O'Hara says.

For AFTY, Pacer kept China-based CSOP on as the ETF's subadvisor, O'Hara confirms, while for USAI Pacer kept SL Advisors on as the ETF's index licenser. In both cases, O'Hara says, Pacer found a fund with "a terrific investment story": with USAI, a focus on midstream energy (but in a more tax-friendly way); and with AFTY, access to China A-shares (to help give the world's second largest economy a bigger weight in international portfolios). Both deals took a couple of months to prep, O'Hara says.

As for what's next for Pacer, O'Hara says that organic growth and product development remain the firm's "core strategy." (For example, watch for more ETFs in Pacer's Trendpilot and Cash Cows series.) Yet he leaves the door open to more M&A opportunities, be they firm acquisitions, adoptions, or asset (i.e. fund merger) deals.

"We're always going to be opportunistic and keep our eyes open," O'Hara tells MFWire. "We have a unique business model in that we do focus a lot on the distribution side and sales and marketing ... We would be looking to fill in holes."

The Pacer team launched their first ETFs in 2015. The privately held shop has since grown to $5.9 billion in AUM and has a team of about 90 people.

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