Financial advisors looking for exposure to artificial intelligence’s massive infrastructure buildout have an option that bypasses the usual suspects of Big Tech. The Pacer Data and Digital Revolution ETF (ticker: TRFK) focuses exclusively on companies that generate at least 50% of their revenue from data manipulation, storage, and transmission—the backbone of AI’s transformation, growth, and daily functioning.
In a conversation with The Wealth Advisor’s Scott Martin, Sean O’Hara, President at Pacer ETF Distributors, explains how TRFK is designed to capture the surge in AI-related infrastructure spending while reducing reliance on the Magnificent Seven. The strategy builds on earlier success of the Pacer ETFs SRVR fund, which focuses on data center real estate. But while SRVR is about the buildings, TRFK is about what goes inside them.
From Real Estate to Revenue Streams
Pacer ETFs made its first move into the digital economy with the Pacer Data & Infrastructure Real Estate ETF (ticker: SRVR), which invests in real estate companies developing and operating data centers. That strategy seeks to deliver a way to benefit from the growing need for storage and cloud infrastructure. After SRVR’s strong performance, the team began examining what drives a data center’s value beyond the physical structure.
“We said, ‘Let’s take everything out of the building and sort it out,’” O’Hara recalls, noting that the deep dive gave way to the realization that “what makes a data center worth something is not entirely based on the physical building. It’s what’s inside the building.” The drivers of AI, he explains, are companies that can “successfully manipulate, store, and transmit data”—what he calls “the guts of the AI trade.”
The fund’s name, TRFK, plays on the idea of “traffic”—the flow of data across chips, hardware, middleware, and software. As O’Hara puts it, the fund captures “all of those component parts that make the manipulation against storage and transmission of data possible.”
Pure-Play Approach Aims for Concentrated Exposure
TRFK’s disciplined allocation rules produce a portfolio that looks very different from broad tech benchmarks. While the NASDAQ 100 and Russell Growth lean heavily on the Magnificent Seven—traditionally, Alphabet/Google (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms/Facebook (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA)—TRFK spreads exposure across 57 companies tied specifically to data infrastructure.
To qualify for inclusion in TRFK, companies must generate at least 50% of their revenue from data manipulation, storage, or transmission. That strict screen leaves out Amazon, Microsoft, and Google, despite their cloud investments, because their revenue bases are far more diversified.
As a result, the portfolio spans the data ecosystem, not just semiconductors. Chips account for 33.42% of holdings, but software and communications equipment also play major roles—26.02% in systems software, 12.83% in communications equipment, and 7.05% in application software, as of June.
Security leader Palo Alto Networks and data platform Snowflake sit alongside chipmakers, underscoring how TRFK captures both raw processing power and the tools that keep data organized and secure. “It’s just not chips,” O’Hara says. “It’s chips and hardware and software.”
While familiar names like NVIDIA and Oracle appear among the holdings, O’Hara also points out that middleware companies—those bridging the gap between raw computing power and end users—are a critical part of the mix. “You have the server and the chips and then the user. Something has to be able to translate all of that and move it from one place to the other—and that’s where the software names come in,” he says.
Diversification Without Performance Sacrifice
The dominance of the Magnificent Seven has amplified concentration risk in many broad technology indexes, opening the door for more targeted strategies. O’Hara highlights how heavily weighted portfolios have become, with exposure often piling up in ways investors don’t fully realize. “When you think about the average portfolio out there, you’d be surprised at what percentage of your assets are in those seven names,” he says. “It’s an astonishingly high number—and maybe warranted for part of it—but you shouldn’t have 30% or 40% of your assets in seven stocks.”
TRFK seeks to reduce concentration risk while capturing technology’s upside. By assigning more significant weights to companies directly tied to data infrastructure, the strategy is designed to turn overlooked holdings into central positions and performance drivers. “What this does is give bigger weights to some of those names that are in those indexes, particularly names that are involved in the data management business,” O’Hara explains. That sharper focus has delivered outperformance without leaning heavily on the Magnificent Seven, making it “a good diversifier play for people who are looking to home in very, very specifically.”
The results speak for themselves. Through June 30, 2025, TRFK gained 30.40% over the trailing 12 months, nearly doubling the 16.41% return of the S&P Global 1200 Index. By weighting infrastructure providers more meaningfully, the strategy seeks to ensure that strong contributors have a tangible impact. As O’Hara puts it: “You could have a name in a [broad-based index] that has that 10 or 20 basis point weight. It could double, and you wouldn’t even feel it. Here, you feel it.”
Capital Expenditure Flow Creates Direct Beneficiaries
The AI buildout demands extraordinary levels of capital, with McKinsey research showing that data centers worldwide are projected to require $6.7 trillion by 2030 to keep pace with demand for compute power—with $5.2 trillion of that specifically for AI processing loads. Significant portions of that capital may flow into areas including servers, chips, security systems, and networking software—core infrastructure without which AI can’t function.
Rather than betting on which AI applications will win out, O’Hara argues, it’s better to focus on the companies selling the tools that make the AI ramp possible. He frames the strategy as “spenders versus receivers,” with TRFK capturing the receivers. “It’s the old gold rush analogy: Do you want to be panning in the river, or do you want to be selling them picks and axes and shovels and tents?” O’Hara asks. “The receivers are going to be the names that are in this ETF.”
That perspective shifts the potential opportunity. Instead of betting on which AI applications succeed, TRFK’s portfolio seeks to benefit from the spending cycle itself. Hardware, software, and infrastructure providers may capture revenue whether a specific AI use case takes off or not, seeking to give advisors exposure to the backbone of the buildout rather than its most speculative edges.
Portfolio Implementation Strategy
For those building balanced portfolios, TRFK may serve a dual role: as a practical way to ease concentration in the Magnificent Seven and as a targeted play on the growth of data infrastructure.
“[People] are using it as a diversifier for a large-cap U.S., which is those seven names,” O’Hara says. “So, if you took a piece of your core and said maybe 5% or 10% goes here, you’re moving away from that over concentration in those specific names, and you’re also picking up performance. It’s a diversifier for sure, but it’s also an alpha generator.”
The allocation framework works on two levels. From a portfolio management perspective, TRFK helps reduce concentration risk while maintaining technology exposure. From a client communication standpoint, it provides advisors with a straightforward narrative built around infrastructure spending and long-term technology trends.
TRFK’s positioning allows the fund to function as both a defensive diversifier and an offensive growth allocation. Its 0.67% dividend yield and 42.34 price-to-earnings ratio, as of June 30, point to established businesses with strong cash flows, not speculative bets on unproven concepts. With a weighted-average market capitalization of $653 billion, the fund seeks to deliver exposure to profitable, large-scale enterprises rather than early-stage ventures.
Timing and Implementation Advantages
Launched in June 2022, TRFK entered the market just as AI infrastructure spending began to accelerate. Since inception, the strategy has returned 32.38% (NAV basis through June 30, 2025). Its rules-based design removes the guesswork of stock picking while quarterly rebalancing aims to keep the portfolio aligned with companies that meet its revenue requirements, adjusting as the data infrastructure landscape evolves.
For advisors, TRFK represents a way to participate in one of technology’s largest investment cycles while solving for concentration risk. By focusing on companies that power the flow of data, this Pacer strategy seeks to provide targeted exposure to the infrastructure layer of AI—a place where spending is not only happening now but is likely to accelerate for years to come.
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Disclosures
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