Making its debut on 06/16/2017, smart beta exchange traded fund Pacer US Small Cap Cash Cows ETF (CALF) provides investors 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Pacer Etfs, CALF has amassed assets over $4.06 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund seeks to match the performance of the Pacer US Small Cap Cash Cows Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.59%.
The fund has a 12-month trailing dividend yield of 1.35%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For CALF, it has heaviest allocation in the Consumer Discretionary sector --about 22.7% of the portfolio --while Industrials and Healthcare round out the top three.
When you look at individual holdings, United Airlines Holdings Inc (UAL) accounts for about 2.52% of the fund's total assets, followed by Expedia Group Inc (EXPE) and Viatris Inc (VTRS).
CALF's top 10 holdings account for about 19.75% of its total assets under management.
Performance and Risk
The ETF has added about 0.42% so far this year and is down about -5.52% in the last one year (as of 09/22/2025). In the past 52-week period, it has traded between $32.00 and $48.76
The fund has a beta of 1.10 and standard deviation of 22.56% for the trailing three-year period. With about 202 holdings, it effectively diversifies company-specific risk .
Alternatives
Pacer US Small Cap Cash Cows 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) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. iShares Russell 2000 Value ETF has $12.07 billion in assets, Vanguard Small-Cap Value ETF has $31.67 billion. IWN has an expense ratio of 0.24% and VBR changes 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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Pacer US Small Cap Cash Cows ETF (CALF): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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