Pacer ETFs rolled out a new exchange traded fund that screens for the highest free-cash-flow producing companies in the U.S.
On Monday, the Pacer US Cash Cows 100 ETF (BATS: COWZ) began trading. COWZ has a 0.49% expense ratio.
“The Pacer US Cash Cows strategy captures an innovative and relatively untapped segment of the market by focusing on US companies with a high free cash flow yield and we’re incredibly excited to make it available to individual investors and advisors,” Sean O’Hara, President of Pacer ETF Distributors, said in a press release. “High quality, high free-cash-flow yielding companies are an important part of a well-balanced portfolio because of their ability to sustain and grow income while also providing an opportunity for capital appreciation over time.”
The new ETF tries to reflect the performance of the Pacer US Cash Cows 100 Index, which is comprised of large- and mid-cap U.S. companies with high free cash flow yields, or those commonly referred to as “cash cows.”
The underlying index selects companies from the Russell 1000 Index and screens those based on average projected free cash flows and earnings over each of the next two fiscal years, excluding financial companies other than real estate investment trusts.
Component companies are then ranked by free cash flow yield for the trailing twelve month period, and equity securities of 100 companies with the highest free cash flow yield are included in the underlying index. Holdings are also weighed in proportion to their trailing twelve month free cash flow with a capped 2% of the weight of the index for any individual company.