Pacer ETFs’ (Pacer)Pacer Cash Cows Index ETF Series (Cash Cows series) has surpassed USD1 billion in assets under management.
The second largest thematic series from Pacer ETFs has taken in more than USD500 million in assets since 2021 began, a 135 per cent increase to the fund family.
Launched in 2016, the Cash Cows series now includes seven ETFs aimed at generating capital appreciation by investing in companies with high free cash flow yield that are trading at a discount. Free cash flow yield measures a company’s total free cash flow relative to its enterprise value. Traditional value managers have used Price/Book as the primary performance determinant. However, this has not worked in recent years. As time has gone on, a company’s value can be found in their intangible assets, something not captured by Price/Book. Pacer sought to solve this issue through the use of Free Cash Flow Yield, potentially resulting in higher returns and more attractive upside/downside capture overtime.
“We’ve witnessed a spike in interest for this ETF family as investors have looked for high quality companies trading at a discount,” says Pacer ETFs Distributors President Sean O’Hara. “Our use of Free Cash Flow Yield has proven to be much more successful in identifying companies whose market capitalisation is primarily based on intangible assets that trade at attractive valuations. This leads us to names and sectors that traditional value managers miss because of their focus on Price/Book. Surpassing USD1 billion in AUM is a testament of our ability to tap into an undervalued market segment and create innovative investment opportunities for our advisors and investors.”
In recent months, the Pacer US Cash Cows 100 ETF (COWZ) and Pacer US Small Cap Cash Cows 100 ETF (CALF) have seen significant growth as their performance and popularity found traction.
Pacer Financial President Joe Thomson adds, “As our firm and fund families continue to grow, it is important that we capture the needs of our investors by staying in front of long-term market themes. The Cash Cows series demonstrates the importance of creating a thoughtful investment strategy that can find value in quality companies.”
Pacer continues to see significant growth, recently crossing USD200 million in assets under management for their Pacer Factor ETF Series, created in partnership with Lunt Capital Management and Salt Financial.