Pacer ETFs Expands Cash Cows Series with Launch of Developed Markets Growth Leaders ETF
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Insights
The introduction of the Pacer Developed Markets Cash Cows Growth Leaders ETF (EAFG) by Pacer ETFs expands the investment landscape by incorporating a strategy that emphasizes free cash flow margins to identify potential growth leaders in international developed markets. This approach reflects an investment thesis that companies generating higher free cash flow are better positioned to sustain and invest in their growth, potentially offering a more resilient investment option during times of economic uncertainty, such as those caused by high interest rates and geopolitical tensions.
From a market research perspective, the collaboration with MSCI for equity screening may enhance the fund's credibility and could attract investors seeking a methodical and data-driven investment approach. Additionally, the fund's focus on developed markets provides diversification for investors whose portfolios may be heavily weighted towards U.S. equities. The success of the Cash Cows series, as evidenced by the significant asset growth, suggests a strong investor appetite for such strategies. However, it's important to monitor the fund's performance against benchmarks and peers to assess the efficacy of its strategy over time.
With over $34 billion in assets accumulated across the Cash Cows series, Pacer's new ETF launch reflects the firm's strategic move to capitalize on a proven approach while tapping into the international equities space. The EAFG's strategy of selecting the top 100 international large- and mid-cap securities based on free cash flow margin could potentially offer investors a growth-focused portfolio component that is less susceptible to short-term market volatilities.
Investors may find the free cash flow metric appealing as it is a strong indicator of a company's financial health and ability to invest in growth without relying on external financing. This can be particularly attractive in an environment where interest rates are rising, as companies with strong free cash flows may be better positioned to weather increased borrowing costs. However, it's important to consider the fund's expense ratio and its impact on net returns, as well as how the strategy aligns with an investor's risk tolerance and investment horizon.
The launch of the EAFG ETF occurs within a broader economic context where investors are increasingly seeking stability amidst fluctuating interest rates and geopolitical unrest. By focusing on developed markets, the fund offers exposure to economies with established financial systems and regulatory frameworks, which might be considered safer havens compared to emerging markets in turbulent times.
However, it's essential to consider the macroeconomic conditions of the developed markets included in the EAFG's portfolio, as these will ultimately impact the performance of the fund. Developed markets often experience slower growth rates compared to emerging markets, which could influence the growth potential of the fund's holdings. Additionally, currency exchange rate fluctuations can affect the returns for investors who are based in different currencies. Therefore, while the fund's strategy might be well-suited for the current economic climate, it is not without its risks and should be evaluated within the context of a diversified investment approach.
The firm adds the latest fund to the widely successful Cash Cows series focused on international large- and mid-cap equity names with high free cash flow
The launch of this fund coincides with a new partnership between Pacer and MSCI, as EAFG is the first of Pacer’s funds to screen equity names using an MSCI Index. EAFG’s strategy tracks the Pacer Developed Markets Cash Cows Growth Leaders Index, pulling the top 100 international large- and mid-cap securities in developed markets with above-average free cash flow margin from the MSCI EAFE Index. The fund supplements Pacer’s product lineup by providing an international growth option alongside the firm’s US large-cap and small-cap growth strategies, COWG and CAFG.
“As markets have been impacted by elevated interest rates and geopolitical tensions, investors’ attention has shifted towards resilient strategies like the high free cash flow approach of our Cash Cows funds,” says Sean O’Hara, President of Pacer ETF Distributors. “Launching EAFG aims to provide investors with a novel growth opportunity that's designed to navigate the current global landscape while leveraging names in developed markets beyond our borders. This addition to our product lineup underscores our firm's commitment to delivering diversified and impactful solutions with investors’ goals in mind. We have found strategically screening companies with the highest free cash flow margin over time may produce higher current and future sales and earnings growth.”
“The launch of EAFG not only marks the latest expansion of our most successful series, but also represents a significant milestone as our first collaboration with index provider MSCI,” adds Joe Thomson, President of Pacer Financial. “We are continuously working to strengthen our partnerships and innovate our product offerings to address the changing dynamics of markets and help investors meet their portfolio goals. We thank our investors and partners for their loyal support as we drive this mission.”
The Cash Cows Series has found notable success through its unique free cash flow approach, having amassed over
To learn more about Pacer’s strategies and fund offerings, visit paceretfs.com.
About Pacer ETFs
Pacer ETFs is a strategy-driven exchange-traded fund provider with 47 ETFs and over
Disclosures
Before investing you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus. A copy may be obtained by visiting www.paceretfs.com or calling 1-877-577-2000. Please read the prospectus carefully before investing.
An investment in the Funds is subject to investment risk, including the possible loss of principal. Pacer ETF shares may be bought and sold on an exchange through a brokerage account. Brokerage commissions and ETF expenses will reduce investment returns. There can be no assurance that an active trading market for ETF shares will be developed or maintained. The risks associated with these funds are detailed in the prospectus and could include factors such as calculation methodology risk, concentration risk, equity market risk, ETF risks, foreign securities risk, large and mid-capitalization investing risk, new fund risk, non-diversification risk, passive investment risk, sector risk, tracking risk, and/or special risks of exchange traded funds.
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Distributor: Pacer Financial, Inc., member FINRA, SIPC, an affiliate of Pacer Advisors, Inc.
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Media
Trevor Davis
Gregory FCA for Pacer ETFs
215-475-5931
trevor@gregoryfca.com
Company
Ashlee Thomson for Pacer ETFs
610-981-6214
ashlee.thomson@pacerfinancial.com
Source: Pacer ETFs
FAQ
What is the new ETF launched by Pacer ETFs in partnership with MSCI?
What is the focus of the Pacer Developed Markets Cash Cows Growth Leaders ETF (EAFG)?
Which index is used by EAFG to screen equity names?
What is the strategy of EAFG in terms of selecting securities?
What is the significance of the partnership between Pacer and MSCI in relation to EAFG?
How has the Cash Cows series performed in terms of assets and growth rate?
