Pacer US Large Cap Cash Cows Growth Leaders ETF

COWG

Market cap $2.48B

Pacer US Large Cap Cash Cows Growth Leaders ETF (COWG) offers a unique blend of cash flow filtering and momentum weighting. COWG trades at a modest premium to the Russell 1000 but at a discount to growth ETF peers, reflecting its quality and mid-cap tilt. Performance has been competitive with growth peers, though COWG lags in earnings growth versus mega-cap-focused funds and carries higher expenses.

Pacer US Large Cap Cash Cows Growth Leaders ETF offers a fundamentally weighted, growth-tilted ETF based on free cash flow margins, providing unique diversification versus mega cap-heavy portfolios. The ETF's methodology avoids narrative and market cap biases, resulting in a portfolio with risk-mitigated, medium-to-high growth potential and broad sector exposure. While COWG has lagged mega cap-focused peers in recent rallies, its structure is poised to outperform in broader, more growth-conducive markets.

COWG has rebounded strongly post-election, tracking large-cap growth, but its valuation is not compelling at nearly 25x earnings and a high PEG ratio. The ETF is heavily concentrated in Information Technology and Health Care, raising concerns about industry diversification and portfolio risk. Momentum and seasonal trends are favorable into summer, but upcoming shareholder meetings and recent volatility could trigger short-term price swings.

Just a month ago, ETF investors were pleased to simply hold onto their money. Now they're looking for big gains in the S&P 500 again.

The Pacer U.S. Large Cap Cash Cows Growth Leaders ETF launched in December 2022 and current has $1.1 billion in assets. COWG has a high expense ratio compared to other products. COWG has underperformed compared to other large cap growth ETFs and lacks exposure to mega cap tech companies.

Pacer US Large Cap Cash Cows Growth Leaders ETF focuses on high-quality growth companies with a growing free cash flow. COWG has outperformed traditional S&P 500 index funds and notable dividend-focused ETFs, providing a 37.7% total return in 2024, including distributions. COWG heavily leans on exposure to technology companies with strong free cash flows. This can lead to share buybacks, dividend increases, and defensive balance sheet.

COWG offers exposure to Russell 1000 companies with robust FCF margins that are momentum-weighted. This idea translated into healthy returns amid this bull market, but no consistent alpha has been delivered. Grossly overweight in IT, COWG beats IVV when it comes to the weighted-average FCF margin and 3-year FCF CAGR, but lags it meaningfully on the growth front.

Cash cow investing is a strategy that has gained popularity among investors seeking stable and consistent returns.

The S&P 500 may be hovering around all-time highs, but uncertainties still prevail in the market. Geopolitical crisis, China's property market crisis, uncertainties about interest rates and severe job cuts from the U.S. tech sector could cause economic slowdown.