Industry Updates

Pacer ETFs lists three Cash Cow ETFs in Europe

The ETFs will follow a free-cash-flow strategy

Theo Andrew

Sean O-Hara Pacer ETFs

Pacer ETFs has entered the European ETF market with the launch of three ETFs from its flagship Cash Cow range.

Listed on Euronext Dublin and Euronext Amsterdam, the three free-cash-flow ETFs cover US, developed markets and global dividend-paying stocks.

The long-awaited entry comes after ETF Stream revealed the group would be coming to Europe in January and follows the success of its range in the US, amassing over $35bn assets under management (AUM) on the back of a bumper 2023.

The three ETFs are:

  • Pacer US Cash Cows 100 UCITS ETF [COWZ]

  • Pacer Developed Markets International Cash Cows 100 UCITS ETF [ICOW]

  • Pacer Global Cash Cows Dividend UCITS ETF [GCOW]

COWZ, which tracks the Solactive Pacer US Cash Cows 100 index, has led a large part of that success growing from $12.5bn to $20bn AUM in 2023.

The ETF offers exposure to the top 100 companies of the Russell 1000 based on free cash flow yield, a metric that indicates a company is producing more cash than it needs to run the business and can invest in growth opportunities.

It returned 14.8% in 2023 versus 24% for the S&P 500 without any exposure to the ‘magnificent seven’ stocks.

It is the cheapest in the group’s range, with a total expense ratio (TER) of 0.49%.

ICOW – which has a TER of 0.65% – tracks the Solactive Pacer Developed Markets International Cash Cows 100 index, screening the FTSE Developed ex-US index for the top 100 international companies based on free cash flow yield.

Meanwhile, GCOW tracks the Solactive Pacer Global Cash Cows Dividend index which adds a dividend yield screen alongside its free cash flow yield screen. It has a TER of 0.60%.

Commenting, Sean O’Hara (pictured), president of Pacer ETFs, said: “By entering the European market we aim to serve a broader demographic of investors and advisors who are looking to tap into the opportunity these free-cash-flow focused funds offer.”

Bruce Kavanaugh, vice president and portfolio manager at Pacer ETFs, added: “Our entrance into this new market is more than just geographical expansion, it is a step forward with our advisor community, sharing innovative strategies that have defined our firm allowing investors to achieve their financial goals.”

As well as targeting the European market, O’Hara previously told ETF Stream the firm was eyeing growth opportunities in Latin America for US investors who prefer the UCITS structure.

“We have expansion plans for Europe and beyond, but there is also a pretty vibrant market in the US for investors who prefer the UCITS structure, non-resident citizens who have relationships with US-based financial advisers,” he said.

Last week, another US asset manager Janus Henderson confirmed its entry into the European ETF market after it acquired Tabula Investment Management.

The firm will look to leverage its current European client base as well as regions such as Latin America, the Middle East and APAC where the UCITS structure is often preferred.

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