The Pacer US Cash Cows 100 ETF (COWZ) was launched on 12/16/2016, and is a passively managed exchange traded fund designed to offer 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 $25.15 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
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
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 1.90%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Energy sector--about 21.60% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Hewlett Packard Enterprise Co (HPE) accounts for about 2.18% of total assets, followed by Airbnb Inc (ABNB) and Nucor Corp (NUE).
The top 10 holdings account for about 20.23% 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 has added roughly 11.83% so far this year and it's up approximately 21.98% in the last one year (as of 10/28/2024). In the past 52-week period, it has traded between $47.29 and $58.80.
The ETF has a beta of 1 and standard deviation of 18.89% for the trailing three-year period. With about 102 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) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $62.90 billion in assets, Vanguard Value ETF has $127.92 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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Get it free >>Pacer US Cash Cows 100 ETF (COWZ): ETF Research Reports
Nucor Corporation (NUE) : Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports
Airbnb, Inc. (ABNB) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
