Launched on June 16, 2017, the Pacer US Small Cap Cash Cows ETF (CALF) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Pacer Etfs. It has amassed assets over $3.60 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
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value 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 1.15%.
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 to the Consumer Discretionary sector -- about 30% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Netapp Inc (NTAP) accounts for about 2.88% of total assets, followed by Td Synnex Corp (SNX) and Zoom Communications Inc (ZM).
The top 10 holdings account for about 21.18% 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 added roughly 19.15% so far this year and is up roughly 30.68% in the last one year (as of 07/20/2026). In the past 52-week period, it has traded between $39.37 and $53.13.
The ETF has a beta of 1.01 and standard deviation of 20.24% for the trailing three-year period. With about 201 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 sufficient 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 Index Fund ETF Shares (VBR) track a similar index. While iShares Russell 2000 Value ETF has $14.42 billion in assets, Vanguard Small-Cap Value Index Fund ETF Shares has $37.02 billion. IWN has an expense ratio of 0.24% and VBR charges 0.05%.
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
This article originally published on Zacks Investment Research (zacks.com).