COWZ: A Possible Explanation For This Cash Cows ETF's Lackluster Returns

The Pacer US Cash Cows 100 ETF (COWZ), despite managing over $18 billion, has significantly underperformed its cash flow-focused U.S. equity ETF peers, delivering a mere 0.21% one-year total return. While COWZ's strategy yields strong quality metrics like high free cash flow and EBIT margins, its reliance on historical free cash flow yield results in an uncompelling growth and valuation profile compared to alternatives. Competitors such as the VictoryShares Free Cash Flow ETF (VFLO), which incorporates forward-looking estimates, and the Pacer US Cash Cows Growth ETF (BUL), offering a better growth-at-a-reasonable-price balance, are highlighted as superior options, leading to a recommendation for investors to consider these alternatives for more consistent long-term returns.

Analysis

The Pacer US Cash Cows 100 ETF (COWZ), despite managing over $18 billion, has significantly underperformed peers, returning only 0.21% over the past year, ranking second-worst among tracked U.S. Equity ETFs. Its strategy selects the top 100 Russell 1000 companies by free cash flow yield, excluding Financials, and weights by free cash flow. While COWZ exhibits strong quality metrics, including a 6.03% free cash flow percentage and 20.15% EBIT margins, its 0.49% expense ratio contributes to a modest 1.63% trailing dividend yield.

COWZ's fundamental profile, as of October 23, 2025, shows it ranking roughly average across size, growth, valuation, and quality factors compared to its peer group. Its 1Y estimated EPS growth of 7.53% and forward P/E of 14.58x are less attractive than competitors like the VictoryShares Free Cash Flow ETF (VFLO), which boasts a 9.10% estimated EPS growth and a 13.47x forward P/E. This indicates COWZ lacks a compelling growth-at-a-reasonable-price (GARP) profile, evidenced by its higher implied PEG ratio of 1.87x compared to VFLO's 1.40x and BUL's leading 1.21x.

Several competitors, including VFLO and the Pacer US Cash Cows Growth ETF (BUL), have outperformed COWZ since September 2023. VFLO's incorporation of forward-looking estimates and BUL's focus on growth-oriented companies, with a 14.43% estimated EPS growth and a 17.45x forward P/E, offer a more balanced and potentially superior factor mix. The analysis concludes that COWZ does not provide a compelling growth and value combination, recommending investors explore alternative cash flow-focused ETFs.

Key Decisions for Investors

• Investors should critically assess their exposure to COWZ, given its recent underperformance and less attractive growth-at-a-reasonable-price (GARP) metrics compared to its peer group.