Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the Pacer US Small Cap Cash Cows ETF (CALF), a passively managed exchange traded fund launched on 06/16/2017.
The fund is sponsored by Pacer Etfs. It has amassed assets over $4.26 billion, making it one of the larger ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.06%.
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.
This ETF has heaviest allocation to the Industrials sector--about 22% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
Looking at individual holdings, Cf Industries Holdings Inc (CF) accounts for about 2.31% of total assets, followed by Flex Ltd (FLEX) and Emcor Group Inc (EME).
The top 10 holdings account for about 20.38% of total assets under management.
Performance and Risk
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.
The ETF has lost about -6.87% so far this year and is down about -3.32% in the last one year (as of 07/08/2025). In the past 52-week period, it has traded between $32 and $48.76.
The ETF has a beta of 1.09 and standard deviation of 23.23% for the trailing three-year period. With about 203 holdings, it effectively diversifies company-specific risk.
Alternatives
Pacer US Small Cap Cash Cows ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, CALF is a good option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $11.27 billion in assets, Vanguard Small-Cap Value ETF has $29.99 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 Reports CF Industries Holdings, Inc. (CF): Free Stock Analysis Report EMCOR Group, Inc. (EME): Free Stock Analysis Report Flex Ltd. (FLEX): Free Stock Analysis Report Vanguard Small-Cap Value ETF (VBR): ETF Research Reports iShares Russell 2000 Value ETF (IWN): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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