The firm expands its fund lineup with rules-based strategies designed to identify companies with the highest forecasted alpha potential, advancing an AI-powered investment approach
Pacer ETFs (“Pacer”) today announced the launch of two new funds: the Pacer S&P 500 3AI Top 100 ETF (CBOE: PSAI) and the Pacer S&P World 3AI Top 300 ETF (CBOE: WDAI). Both funds seek to track the total return performance of their respective S&P 3AI indices, offering a differentiated, AI-powered approach to equity investing.
The funds are designed to provide investors with targeted exposure to companies with the highest forecasted excess return potential, using a disciplined, rules-based methodology powered by AI and machine learning. Developed in collaboration with S&P Dow Jones Indices and 3AI, the indices leverage proprietary 3AI Alpha Intelligence Scores to rank and select companies based on their expected 12-month alpha relative to a global universe of equities.
The Pacer S&P 500 3AI Top 100 ETF focuses on U.S. large-cap equities, selecting 100 companies from the S&P 500 with the highest 3AI scores. The Pacer S&P World 3AI Top 300 ETF extends this approach globally, selecting 300 companies from developed markets across the S&P World Index to offer broader international diversification.
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“At a time when investors are increasingly looking for new sources of return beyond traditional beta and static factor strategies, these funds leverage a differentiated approach to equity investing,” said Sean O’Hara, President of Pacer ETF Distributors. “By combining the scale and efficiency of S&P DJI indexing with forward-looking AI-driven insights generated by 3AI, we believe these strategies can play a valuable role in modern portfolio construction.”
3AI’s investment process applies machine learning models to analyze a wide range of data inputs, including company fundamentals, market data, and macroeconomic indicators, to generate forward-looking alpha forecasts. These forecasts are incorporated into index construction through a transparent governance framework maintained by S&P Dow Jones Indices, with built-in controls, validation procedures, and human oversight, as well as sector and security caps and regular rebalancing.
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“The S&P 500 3AI Top 100 Index and the S&P World 3AI Top 300 Index are AI-enhanced benchmarks designed to track companies with the highest 12-month excess return forecasts, as generated by 3AI’s machine-learning models analyzing company data and market signals, and leveraging S&P DJI’s robust index construction, governance, and commitment to transparency,” said Rupert Watts, Head of Factors and Dividends at S&P Dow Jones Indices. “We are delighted to collaborate with Pacer to provide access to intelligent and adaptive investment solutions, underscoring our ongoing commitment to delivering high-quality, forward-looking indices that harness AI-powered technology and insights.”
The resulting strategies aim to complement both passive and active allocations by providing a systematic approach to identifying potential sources of excess return, while maintaining the transparency and discipline of index-based investing.
