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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Pacer Etfs, and has been able to amass over $4.30 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. CALF 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
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 one of the more expensive products in the space.
CALF's 12-month trailing dividend yield is 1.24%.
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.
This ETF has heaviest allocation in the Consumer Discretionary sector - about 21.20% of the portfolio. Industrials and Information Technology round out the top three.
Taking into account individual holdings, Ovintiv Inc (OVV) accounts for about 2.09% of the fund's total assets, followed by Expedia Group Inc (EXPE) and Cf Industries Holdings Inc (CF).
Its top 10 holdings account for approximately 19.58% of CALF's total assets under management.
Performance and Risk
The ETF has lost about -16.39% and is down about -20.19% so far this year and in the past one year (as of 05/08/2025), respectively. CALF has traded between $32 and $48.76 during this last 52-week period.
The ETF has a beta of 1.09 and standard deviation of 24.58% 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.
Avantis U.S. Small Cap Value ETF (AVUV) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $14.47 billion in assets, Vanguard Small-Cap Value ETF has $27.74 billion. AVUV has an expense ratio of 0.25% 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Pacer US Small Cap Cash Cows ETF (CALF): ETF Research Reports Expedia Group, Inc. (EXPE): Free Stock Analysis Report CF Industries Holdings, Inc. (CF): Free Stock Analysis Report Vanguard Small-Cap Value ETF (VBR): ETF Research Reports Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports Ovintiv Inc. (OVV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
