The Pacer US Cash Cows 100 ETF (COWZ) made its debut on 12/16/2016, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
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
The fund is managed by Pacer Etfs. COWZ has been able to amass assets over $20.99 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Pacer US Cash Cows 100 Index before fees and expenses.
The Pacer US Cash Cows 100 Index uses an objective, rules-based methodology to provide exposure to large and mid-capitalization U.S. companies with high free cash flow yields.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.49% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.95%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
COWZ's heaviest allocation is in the Energy sector, which is about 16.90% of the portfolio. Its Information Technology and Healthcare round out the top three.
When you look at individual holdings, Conocophillips (COP) accounts for about 2.31% of the fund's total assets, followed by Exxon Mobil Corp (XOM) and Chevron Corp (CVX).
Its top 10 holdings account for approximately 21.13% of COWZ's total assets under management.
Performance and Risk
So far this year, COWZ has lost about -7.26%, and is down about -3.55% in the last one year (as of 05/08/2025). During this past 52-week period, the fund has traded between $47.46 and $61.35.
COWZ has a beta of 0.95 and standard deviation of 19.30% for the trailing three-year period. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Pacer US Cash Cows 100 ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $66.65 billion in assets, Vanguard Value ETF has $130.52 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 - Large 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 Cash Cows 100 ETF (COWZ): ETF Research Reports Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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