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Is Pacer US Small Cap Cash Cows 100 ETF (CALF) a Strong ETF Right Now?

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Launched on 06/16/2017, the Pacer US Small Cap Cash Cows 100 ETF (CALF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Pacer Etfs. CALF has been able to amass assets over $8.37 billion, making it one of the largest ETFs in the Style Box - Small Cap Value. Before fees and expenses, CALF seeks to match the performance of the Pacer US Small Cap Cash Cows Index.

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.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for CALF are 0.59%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.18%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

CALF's heaviest allocation is in the Consumer Discretionary sector, which is about 38% of the portfolio. Its Industrials and Energy round out the top three.

When you look at individual holdings, Meritage Homes Corp (MTH - Free Report) accounts for about 2.39% of the fund's total assets, followed by Signet Jewelers Limited (SIG - Free Report) and American Eagle Outfitters Inc Com (AEO - Free Report) .

CALF's top 10 holdings account for about 22.2% of its total assets under management.

Performance and Risk

So far this year, CALF has lost about -0.17%, and was up about 20.15% in the last one year (as of 02/20/2024). During this past 52-week period, the fund has traded between $35.81 and $48.89.

The ETF has a beta of 1.25 and standard deviation of 25.51% for the trailing three-year period. With about 100 holdings, it effectively diversifies company-specific risk.


Pacer US Small Cap Cash Cows 100 ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $11.99 billion in assets, Vanguard Small-Cap Value ETF has $26.90 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Value.

Bottom Line

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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