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Should Pacer US Small Cap Cash Cows 100 ETF (CALF) Be on Your Investing Radar?

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Launched on 06/16/2017, the Pacer US Small Cap Cash Cows 100 ETF (CALF - Free Report) 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 $5.91 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. 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

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 counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.59%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.42%.

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.

This ETF has heaviest allocation to the Consumer Discretionary sector--about 22% of the portfolio. Information Technology and Industrials round out the top three.

Looking at individual holdings, Patterson-Uti Energy Inc (PTEN - Free Report) accounts for about 2.45% of total assets, followed by Qorvo Inc (QRVO - Free Report) and Insight Enterprises Inc (NSIT - Free Report) .

The top 10 holdings account for about 21.92% 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 -14.01% so far this year and is down about -19.33% in the last one year (as of 03/07/2025). In the past 52-week period, it has traded between $37.70 and $49.16.

The ETF has a beta of 1.20 and standard deviation of 23.66% for the trailing three-year period. With about 101 holdings, it effectively diversifies company-specific risk.

Alternatives

Pacer US Small Cap Cash Cows 100 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 reasonable 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 Avantis U.S. Small Cap Value ETF (AVUV - Free Report) and the Vanguard Small-Cap Value ETF (VBR - Free Report) track a similar index. While Avantis U.S. Small Cap Value ETF has $14.69 billion in assets, Vanguard Small-Cap Value ETF has $29.62 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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