Pacer Cash Cows Series: 3 Questions in 3 Minutes

[This ETF Industry Perspective is sponsored by Pacer ETFs in partnership with Cboe Global Markets.]

What is the investment objective?

The investment objective of the Cash Cows Index series, which is a series of ETFs listed on Cboe, is to provide alternatives to traditional value investing, which has predominantly been based on this notion of low price to book. In a market where the majority of market value today is intangible assets, it's very difficult to measure traditional book value. Free cash flow and free cash flow yield allow you to determine what stocks are cheap versus their peers and a different metric that's more in line with the way the economy works today and the way the overall market is valued.

Why now?
Why now? Well, we're in the midst of a sort of transition from a growth phase in the market to more of a value phase, and for investors who are looking to participate in that shift, the Cash Cows series offers them an alternative to that old traditional low-price-to-book investing approach. It opens up more opportunities to invest in sectors and individual stocks that would not necessarily be considered traditional value names.

How should I utilize this product in my portfolio allocation?
If you're a client or a financial advisor, the way you would utilize this in your portfolio is you would include it in that value sleeve. Most investors who run diversified portfolios and most financial advisors who do so on behalf of their clients will own U.S. equities, large cap, midcap, small cap, and international equities as well. And they'll typically divide those equity investments between a sleeve of growth-based investments and a sleeve of value-based investments. And so, investors and financial advisors can use the Cash Cows series to complement and supplement their traditional value allocations.