Sean O'Hara, Pacer QDPL

Sean O'Hara started in financial services in 1985, moved into wholesaling, and helped build the Hartford's mutual fund and 401k platforms before going independent in 2007. By 2015, he and partner Joe Thompson were launching Pacer's first ETFs. Today Pacer manages roughly $42 billion across 57 products, every one built around a simple filter: innovative, disruptive, or unique. No cheap beta replication.

About Sean O'Hara and Pacer ETFs

Sean's path was classic industry progression until it wasn't. After nearly two decades at the Hartford building out their mutual fund and 401k distribution, he left to start his own firm. The early years were lean. Pacer launched its first ETFs in 2015, and growth was slow and deliberate. The firm now runs $42 billion, but the product philosophy hasn't changed: if a strategy already exists as cheap passive exposure, Pacer won't build it.

QDPL: The Mechanics

QDPL is an S&P 500-based income strategy. The fund holds 85% equities and 15% T-bills. The income comes from dividend futures, not from selling covered calls or using leverage. The result is roughly 5% yield today, about four times the S&P 500's dividend yield.

The key mechanic: S&P 500 dividend futures let the fund capture expected dividends at a discount. Because dividends are contractual obligations, the futures pricing tends to be more predictable than equity options. The T-bill sleeve provides collateral and a small yield kicker. The combination produces cash flow that would normally require either significantly more yield-chasing risk or giving up upside through call selling.

Tax Treatment

Most of QDPL's distributions are classified as tax-free return of capital. For taxable accounts, that's a meaningful structural advantage over traditional dividend strategies where every payout is an ordinary income event. The return of capital classification reduces the investor's cost basis, deferring taxes until the position is sold.

Trade-offs

The 85/15 equity-to-T-bill split means QDPL will trail a pure S&P 500 position in strong up markets by roughly the 15% allocated to bills. In flat or down markets, the T-bill cushion and dividend income offset some of the equity drag. Sean frames this honestly: you're giving up a slice of upside participation for a significant income stream and better tax treatment.

The timing angle matters too. With short-term yields falling back toward 3%, the T-bill sleeve contributes less on its own. But the dividend futures income is independent of rate direction, so the core thesis holds regardless of where the Fed goes.

Portfolio Fit

Sean positions QDPL two ways for advisors. First, a 50/50 blend with SPY for clients who want S&P exposure but need more income than the index delivers on its own. Second, as a bond replacement for clients who want equity-market participation but can't afford the income drop-off from moving out of fixed income. The tax-free return of capital makes the after-tax comparison with bonds even more favorable.

Pacer's Distribution Model

Pacer runs 120-plus salespeople covering advisors directly. In an industry that has mostly shifted to digital distribution and content marketing, that's a contrarian bet. Sean argues the model works because advisors still want to talk to someone who understands how a product actually fits into a portfolio, not just read a factsheet. The sales force also gives Pacer direct feedback on what advisors are actually asking for, which feeds back into product development.

Patience as Product Strategy

Sean points to SRVR (data center and infrastructure REITs) and TRFK (global transportation and logistics) as examples of products that sat dormant for years before the market caught up. SRVR was a sleepy fund until the AI infrastructure buildout made data centers one of the hottest trades in the market. TRFK followed a similar arc with supply chain reshoring. In both cases, Pacer had the product in place before demand showed up. That patience is part of the business model: launch early, keep the fund alive, and wait for the thesis to play out.

"Every product we launch has to pass one filter: is it innovative, disruptive, or unique? If the answer is no, we don't build it. We're not in the business of replicating cheap beta."

Key Takeaways

• QDPL generates roughly 5% yield through dividend futures — four times the S&P 500 dividend yield, no leverage or covered calls involved
• 85% equity, 15% T-bills. You keep most of the S&P upside while pulling meaningful income
• Most distributions are tax-free return of capital, a structural edge over traditional dividend funds in taxable accounts
• S&P dividends have historically grown 5-7% per year, creating a built-in tailwind for the futures contracts
• Pacer's 120-person sales force is a contrarian bet on boots-on-the-ground distribution

Listen to the Full Episode

This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Sean O'Hara, including the breakdown of SRVR and TRFK's slow-burn success and how market maker relationships shape ETF liquidity, listen on Spotify, Apple Podcasts, or watch on YouTube.