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Pacer ETFs
 
 
 

 

ETF Education Center

  • Individual Investors
  • Financial Advisors
  • Institutions

Whether you're exploring ETFs for the first time or going deeper on creation/redemption mechanics and portfolio rebalancing, start your ETF Education journey here.

U.S. ETF Industry AUM

$13.4T

in assets as of year-end 2025. Up 30% in a single year.*

2015
 
$2.1T
2017
 
$3.4T
2019
 
$4.4T
2021
 
$7.2T
2023
 
$8.1T
2025
 
$13.4T

*Source: ETFGI / LSEG Lipper, Dec 2025

Understanding
Exchange-Traded Funds

An overview of exchange-traded funds, how they are structured, and how they are commonly used in portfolios.

ETF Fundamentals

An investment fund that holds a mix of assets and trades on an exchange like a stock, giving investors diversification and flexibility in a single purchase.

ETF Education Video

Basics of ETFs

Having problems viewing the video? Click Here

 

Resources

 

How ETFs Compare to
Other Investment Vehicles

ETFs share characteristics with both mutual funds and individual stocks, but offer a distinct combination of diversification, intraday trading, and cost efficiency. See how they stack up:

  Mutual Funds
ETFs Focus
Individual Stocks
Structure Pooled investment vehicle priced once per day Pooled investment vehicle traded intraday on an exchange Ownership of a single public company
Diversification Diversification across multiple securities Built-in diversification within a single investment Exposure limited to one issuer
Trading Purchased and redeemed at NAV Trades throughout the day at market prices Trades throughout the day at market prices

Benefits of ETFs

Explore some of the key structural advantages that have made ETFs a widely used investment vehicle.

Transparency

Daily visibility into holdings and portfolio construction.*

Diversification

Broad exposure across companies, sectors, and markets.

$

Lower Cost

Often a more cost-efficient way to access market exposure.

Trading Flexibility

Intraday trading and accessibility in single-share increments.

Tax Efficiency

Structure-driven efficiencies relative to many mutual funds.

 

Benefit

Transparency

Daily Holdings Disclosure

ETFs provide daily visibility. That means when you review an ETF's portfolio, you're seeing the most up-to-date information available.

 

Portfolio Transparency

By regulation, ETFs must disclose their full list of holdings every trading day. Investors can see exactly what securities make up the fund and how it is positioned, updated in real time.

With ETFs, transparency is built into the structure. You'll always know what you own and you'll know it today.

All ETFs must disclose their daily holdings. However, there is a group of ETFs that are non-transparent or semi-transparent and may not disclose full holdings daily. Transparency is more relevant to actively managed ETFs, meaning someone assesses the ETF's holdings daily. Passively managed ETFs are also transparent, but their holdings only change periodically.

*Certain ETFs are non-transparent or semi-transparent and may not disclose full holdings daily.

Benefit

Diversification

Broad Market Diversification

Diversification is one of the core benefits of ETFs. Each fund is built as a portfolio of individual holdings, giving investors access to a wide range of securities with a single investment.

For example, some of the most widely recognized ETFs track major benchmarks like the S&P 500 (a U.S. large-cap index), the S&P MidCap 400, or the Russell 1000 (a U.S. large-cap index). By owning one of these ETFs, investors gain exposure to companies across sectors and industries.

 

Passive by Design

Most ETFs are managed on a passive basis, designed to closely follow an underlying index rather than actively select securities.

Benefit

Lower Cost

Cost-Effective

ETFs generally have lower expense ratios and fewer embedded fees, making them an attractive choice for cost-conscious investors. By minimizing costs, ETFs provide a more efficient way to pursue investment goals while protecting long-term portfolio value.

 

No Hidden Fees

ETFs typically have:

  • No sales loads
  • No commissions on creation/redemption
  • No 12b-1 marketing fees

This transparent structure reduces ongoing expenses and allows investors to keep more of their returns.

Benefit

Trading Flexibility

Intraday Liquidity

ETFs can be bought and sold throughout the trading day. This means you can place an order at any time the market is open and receive the current market price of the ETF, not an end-of-day valuation.

 

Minimum Investment

ETFs are accessible to a wide range of investors. Most funds can be purchased in single-share increments. If an ETF is trading at $25, you can begin investing with just $25. By contrast, many mutual funds require a starting investment of $1,000 or more.

Benefit

Tax Efficiency

Hypothetical Tax Drag Over 20 Years

Hypothetical Growth of $500,000 over 20 years at 7.5% per year. Tax drag is the reduction of potential income due to taxes — the loss in returns as a result of taxation.

Hypothetical Tax Drag Over 20 Years
 

Tax Efficient Design

One of the key benefits of ETFs is their unique tax-efficient design. Thanks to the creation and redemption mechanism, ETFs can rebalance their portfolios without triggering taxable capital gains distributions for shareholders each year.

This sets them apart from traditional mutual funds, where rebalancing often results in realized gains passed on to investors. Investors may still incur taxes when buying or selling ETF shares. Pacer does not provide tax advice. Consult with your own legal and tax professional concerning your individual situation

How ETFs Work

Creation & Redemption
 

Creation & Redemption

Learn how ETF shares are created and redeemed through the primary market and the role authorized participants play in keeping the market functioning efficiently.

Learn More
Rebalancing
 

Rebalancing

Explore how ETFs maintain alignment with their underlying indexes or strategies through scheduled portfolio adjustments and ongoing maintenance.

Learn More

 ETF Terms

Authorized Participant (AP) A financial institution responsible for creating and redeeming ETF shares.
Primary Market The market where ETF shares are created and redeemed directly with authorized participants.
Secondary Market The exchange where ETF shares trade between investors.

Risks of ETFs

 

Market Risk

Equity-based ETFs fluctuate with underlying securities and are fully exposed to broader market movements.

Execution Risk

Although trading costs are generally low, execution risk may arise depending on liquidity and trading strategy.

Tracking Difference

Certain ETFs may experience performance differences relative to their stated index over time.

Specialized Risk

ETFs linked to commodities or derivatives may involve additional risks related to futures markets and complex strategies.

As with all investments, ETFs involve risk.

 

Looking to Learn More About ETFs?

Pacer ETFs is committed to helping investors and financial professionals build a stronger understanding of ETFs through accessible education, timely insights, and practical resources. Whether you have questions about ETF basics, product structures, or Pacer ETFs strategies, our team is here to help.

To connect with us directly, email [email protected] or call 877-337-0500.