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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $3.61 billion, this makes it one of the larger ETFs in the Style Box - Small Cap Value. CALF is managed by Pacer Etfs. CALF, before fees and expenses, 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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.59%.
It's 12-month trailing dividend yield comes in at 1.40%.
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.
CALF's heaviest allocation is in the Consumer Discretionary sector, which is about 25.2% of the portfolio. Its Information Technology and Energy round out the top three.
Looking at individual holdings, United Airlines Holdings Inc (UAL) accounts for about 2.13% of total assets, followed by Fox Corp (FOXA) and Expedia Group Inc (EXPE).
CALF's top 10 holdings account for about 19.69% of its total assets under management.
Performance and Risk
Year-to-date, the Pacer US Small Cap Cash Cows ETF has added about 2.69% so far, and it's up approximately 2.33% over the last 12 months (as of 01/28/2026). CALF has traded between $32.00 $45.97 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 21.27% for the trailing three-year period. With about 201 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 $12.72 billion in assets, Vanguard Small-Cap Value ETF has $34.07 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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