A smart beta exchange traded fund, the Pacer US Cash Cows 100 ETF (COWZ) debuted on 12/16/2016, and offers broad exposure to the Style Box - Large 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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
Because the fund has amassed over $18.62 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. COWZ is managed by Pacer Etfs. COWZ 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 COWZ, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.85%.
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 in the Healthcare sector - about 22.1% of the portfolio. Information Technology and Energy round out the top three.
When you look at individual holdings, Hca Healthcare Inc (HCA) accounts for about 2.26% of the fund's total assets, followed by Booking Holdings Inc (BKNG) and Gilead Sciences Inc (GILD).
The top 10 holdings account for about 20.83% of total assets under management.
Performance and Risk
So far this year, COWZ return is roughly 11.5%, and was up about 20.81% in the last one year (as of 07/31/2026). During this past 52-week period, the fund has traded between $55.15 and $67.86.
COWZ has a beta of 0.81 and standard deviation of 14.74% 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 Index Fund ETF Shares (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $103.21 billion in assets, Vanguard Value Index Fund ETF Shares has $188.2 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.
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
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Pacer US Cash Cows 100 ETF (COWZ): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).