Launched on 12/16/2016, the Pacer US Cash Cows 100 ETF (COWZ – Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Pacer Etfs. It has amassed assets over $24.97 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.49%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.82%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector–about 21.10% of the portfolio. Consumer Discretionary and Energy round out the top three.
Looking at individual holdings, Conocophillips (COP – Free Report) accounts for about 3.27% of total assets, followed by Expedia Group Inc (EXPE – Free Report) and Hewlett Packard Enterprise Co (HPE – Free Report) .
The top 10 holdings account for about 22.43% of total assets under management.
Performance and Risk
COWZ seeks to match the performance of the Pacer US Cash Cows 100 Index before fees and expenses. The Pacer US Cash Cows 100 Index uses an objective, rules-based methodology to provide exposure to large and mid-capitalization U.S. companies with high free cash flow yields.
The ETF return is roughly 0% so far this year and was up about 10.62% in the last one year (as of 01/02/2025). In the past 52-week period, it has traded between $50.77 and $61.35.
The ETF has a beta of 1.02 and standard deviation of 18.67% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
Pacer US 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, COWZ is a sufficient option for those seeking exposure to the Style Box – Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Schwab U.S. Dividend Equity ETF (SCHD – Free Report) and the Vanguard Value ETF (VTV – Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $65.31 billion in assets, Vanguard Value ETF has $126.22 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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.
Financial Market Newsflash
No financial news published today. Check back later.
