Pacer U.S. Cash Cows 100 ETF (COWZ) Offers a Unique Way to Diversify Away from Broad Market and Capitalize on Companies’ Financial Discipline

The Pacer U.S. Cash Cows 100 ETF (COWZ) focuses on companies with high free cash flow that offer unique value and quality. COWZ identifies companies with strong cash reserves that are likely to outperform in an uncertain economic environment.

While COWZ has historically moved in lockstep with the S&P 500, diversification in a broad-cap fund is key to reducing overall aggressive portfolio risk and ensuring balanced growth. Apparently, FCF is used to distinguish “quality” companies from the rest “growth-for-account-of-debt-ramp-up” ones and is a metric that shows their profitability, even after accounting for optional value-oriented activities such as dividends and buybacks.

The top 10 of COWZ's 102 holdings account for 20% of the fund's NAV. The top two companies are not-so-prominent and massive Airbnb (ABNB) and Hewlett Packard Enterprise (HPE), two companies that investors don't usually think of tracking various broad market performances. They have proven to be cash flow kings, especially compared to stocks like NVDA and MSFT. COWZ is overweight in the energy and consumer discretionary sectors and significantly underweight in the information technology sector.