The Cash Cows ETF Series

Cash Cows Index Strategy

• Free cash flow is the cash remaining after a company has paid expenses, interest, taxes, and long-term investments. It can be used to buy back stock, pay dividends, or participate in mergers and acquisitions.
• The ability to generate a high free cash flow yield indicates a company is producing more cash than it needs to run the business and can invest in growth opportunities.
• Small-cap companies offer a variety of opportunities
  including exposure to companies with higher growth
  that are often under-researched.
• Watch to learn more about how Pacer Cash Cows Index ETFs work.

Free Cash Flow Yield Comparison

as of 12/31/2019¹

1. High Quality Small-Cap Companies
Unique focus on quality small-cap companies with high free cash flow yield.
 

2. Trading at a Discount
Exposure to opportunities in the market where high quality stocks are trading at a discount.

3. Long-Term Capital Appreciation
Using free cash flow yield to measure the sustainability of a company may produce potentially higher returns and more attractive upside/downside capture over time.

Definitions
Free Cash Flow (FCF): A company’s cash flow from operations minus capital expenditures (expenses, interest, taxes, and long-term investments)
Enterprise Value (EV): A company’s market capitalization adjusted to eliminate any capital structure bias (i.e. by adding debt and subtracting cash or cash equivalents)
Free Cash Flow Yield: FCF/EV. Measures a company’s total free cash flow relative to its enterprise value. This is an internal statistic and does not constitute investor yield.
Upside/Downside capture: Upside/downside capture ratio show you whether a given fund has outperformed--gained more or lost less than--a broad market benchmark during periods of market strength and weakness

Pacer US Small Cap Cash Cows Strategy Overview

An objective rules-based methodology that uses a quality screen to select top companies in the index universe.
All data as of December 2019 quarterly rebalance.

Source: FactSet
⁽¹⁾The individual components of the index are weighted by their total market capitalization. Market capitalization is determined by multiplying each company’s market price by their total outstanding shares. Companies are ranked in descending order based on their market cap in dollars.
⁽²⁾All financial companies are excluded from the index universe. In addition, companies with negative free cash flow (FCF) are excluded based on FactSet analyst consensus estimates for average projected FCF and earnings over the next two years.
⁽³⁾The 3-year dividend growth is a weighted average of each company’s 3-year dividends per share growth rate. The growth rate is determined by measuring the change between each company’s most recent trailing 12 month dividends per share versus their trailing 12 month dividend per share 3 years ago.
⁽⁴⁾Remaining 100 companies are weighted by their trailing twelve month free cash flow. Free cash flow weighting is calculated as a company’s operating cash flow minus capital expenditures. Companies are ranked in descending order based on their free cash flow in dollars
P/E ratio a fundamental measure commonly used to determine if an investment is valued appropriately. Each holding’s P/E is the latest closing price divided by the latest fiscal year’s earnings per share. Negative P/E ratios are excluded from this calculation.