The Pacer US Small Cap Cash Cows 100 ETF (CALF – Free Report) was launched on 06/16/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Pacer Etfs. It has amassed assets over $8.14 billion, making it one of the larger ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.59%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.07%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Consumer Discretionary sector–about 26.60% of the portfolio. Energy and Industrials round out the top three.
Looking at individual holdings, Skywest Inc (SKYW – Free Report) accounts for about 2.71% of total assets, followed by Hanesbrands Inc (HBI – Free Report) and Sylvamo Corp (SLVM – Free Report) .
The top 10 holdings account for about 21.83% of total assets under management.
Performance and Risk
CALF seeks to match the performance of the Pacer US Small Cap Cash Cows Index before fees and expenses. The Pacer US Small Cap Cash Cows Index uses an objective, rules-based methodology to provide exposure to small-capitalization U.S. companies with high free cash flow yields.
The ETF return is roughly 0.09% so far this year and is down about -7.13% in the last one year (as of 01/03/2025). In the past 52-week period, it has traded between $42.22 and $49.16.
The ETF has a beta of 1.20 and standard deviation of 24.06% for the trailing three-year period. With about 100 holdings, it effectively diversifies company-specific risk.
Alternatives
Pacer US Small Cap Cash Cows 100 ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, CALF is a reasonable option for those seeking exposure to the Style Box – Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Avantis U.S. Small Cap Value ETF (AVUV – Free Report) and the Vanguard Small-Cap Value ETF (VBR – Free Report) track a similar index. While Avantis U.S. Small Cap Value ETF has $15.13 billion in assets, Vanguard Small-Cap Value ETF has $30.60 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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