The Importance of Staying Active
Investors can find many attractive elements in the high-yield bonds and dividend-paying equities. But deciding that you want to invest in these bonds or equities is only half of the equation. The second half is to identify your investment strategy. Several factors must be considered when evaluating the benefits of an active versus a passive approach, including asset class, investment vehicles, fees, tax issues and performance.
At Pacific Global ETFs, we believe the advantages of an active-management approach to investing are abundant.
Strategic Selection
Because actively managed ETFs aren’t forced to own every asset in an index, they can execute a two-pronged strategy: 1) avoiding bonds or equities that have concerning qualities, and 2) overweighting bonds or equities with appealing attributes. For example, an active strategy might emphasize assets with predictable medium-term performance versus companies whose industries are more likely to experience disruption.
By selecting names with favorable risk/reward profiles and omitting some securities that passive indices are required to hold, Pacific Global ETFs believes capital preservation benefits and consistent income will be realized over time. We don’t suggest that advisors and investors who utilize passive strategies for income need to abandon them entirely. But integrating an active approach could complement their current strategy and provide better diversification.
Historically, stock pickers have tried to predict big winners and emulate the insightful investors who bought Apple for $2 a share in 2004. At Pacific Global ETFs, we feel an effective approach to income investing focuses just as much on avoiding miscalculations. After all, superior portfolio performance isn’t just about making the right call before an asset takes off, but not making the wrong call before it crashes.
Michael Skillman is chief executive officer of Cadence Capital Management, sub-advisor to Pacific Global US Equity Income ETF and Pacific Global International Equity Income ETF.

This commentary reflects the views of investment professionals at Cadence Capital Management, are based on current market conditions, are subject to change without notice, and are presented for informational purposes only. The opinions and the information on this site should not be construed as recommendations of any investment strategy or product for a particular investor. All materials are compiled from sources believed to be reliable, but accuracy cannot be guaranteed.

Each of Pacific Global Advisors LLC, investment adviser, Cadence Capital Management LLC and Pacific Asset Management, the sub-advisers, are indirect or direct wholly owned subsidiaries of Pacific Life Insurance Company.


Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their net asset value (NAV), and are not individually redeemable from the Funds. Shares may only be redeemed directly from the Funds by Authorized Participants in creation units only. You may incur brokerage commissions when buying or selling shares on an exchange or through your financial intermediary, which may reduce returns.

All investing involves risk, including the possible loss of the principal amount invested.

Investments in high yield securities or “junk bonds” are considered predominantly speculative and are subject to a greater risk of loss of income and principal than higher grade debt securities. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the fund. Fixed income securities are subject to the risk that securities could lose value because of interest rate changes.  Securities of foreign issuers may subject it to foreign investment risk. These risks include, among others, adverse changes in foreign economic, political, regulatory and other conditions.

While the Fund may hold securities of companies that have historically paid a high dividend yield, it is subject to dividend-paying stock risk, as those companies may reduce or discontinue their dividends, reducing the yield of the Fund; The net asset value of the Fund will fluctuate based on changes in the value of the U.S. equity securities held by the Fund. Equity prices can fall rapidly in response to developments affecting a specific company or industry, or to changing economic, political or market conditions. Issuer Risk. Fund performance depends on the performance of individual securities that the Fund holds. Changes in the financial condition or credit rating of an issuer of those securities may cause the value of the securities to decline. Large Capitalization Company Risk. Larger, more established companies may be unable to attain the high growth rates of successful, smaller companies during periods of economic expansion. Overall market risks may affect the value of the Fund. Factors such as U.S. economic growth and market conditions, interest rate levels and political events affect the securities markets. The Fund faces numerous market trading risks, including the potential lack of an active market for the Shares, losses from trading in secondary markets, and disruption in the creation/redemption process of the Fund. Sector risk is the possibility that securities within the same group of industries will decline in price due to sector-specific market or economic developments. If the Fund invests more heavily in a particular sector, the value of its shares may be especially sensitive to factors and economic risks that specifically affect that sector.

The Funds are actively managed; thus, investment decisions are made based on investment views and there is no guarantee that the investment views will produce the desired results or expected returns.

All investing involves risk, including the possible loss of the principal amount invested.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a Pacific Global ETF prospectus or summary prospectus, please call (866) 933-2398 or visit the Fund’s webpage on our website at Read the prospectus or summary prospectus carefully before investing.

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