Amplify ETFs Launches Fund With Zero-Fee Introductory Offer

Amplify ETFs Launches Fund With Zero-Fee Introductory Offer

COWS, a free cash flow exchange-traded fund, will have a 0% expense ratio until September 2024.

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Reviewed by: Ron Day
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Edited by: Mark Nacinovich

Amplify ETFs has launched the Amplify Cash Flow Dividend Leaders ETF (COWS), a fund that offers investors a 0% expense ratio until next September. 

The exchange-traded fund tracks U.S. stocks of companies with a high free cash flow an alternate measure of profitability to the more common measure of net income. It also focuses on dividend-paying companies. The fund is seeking to differentiate itself from the existing $15.1 billion Pacer U.S. Cash Cows 100 ETF (COWZ), which shares a focus on free cash flow and a bovine-themed ticker. 

The Amplify fund aims to invest in companies with consistent profitability, specifically high free cash flow, and dividend payments. Sustaining positive free cash flow and dividend payments requires steady profitability and thus are seen as markers of a high-quality business. Amplify aims to stand out from competitors with an introductory offer where the fund’s 0.39% expense ratio will be waived until at least Sept. 11, 2024.  

“A benefit of free cash flow is it’s more difficult to manipulate than net income. On the other hand, it can be lumpier than net income, which makes it a little tougher to identify trends in the profitability of a company,” said Sumit Roy, senior ETF analyst at etf.com. 

COWS Fee-Free Introductory Offer 

This introductory offer bears a resemblance to the deal offered by the Salt Low truBeta U.S. Market ETF (LSLT). From May 2019 to May 2020 LSIT had a -0.05% expense ratio, essentially paying investors for holding it. The fund, which was launched in March 2019, was closed in February 2022 and liquidated shortly thereafter.  

COWS’s undiscounted expense ratio of 0.39% is also lower than COWZ’s 0.49% 

Free Cash Flow With Sector Diversification 

COWS also aims to diversify its portfolio, with a 24% cap on exposure to any one industry. The cap may help counteract the fact that many factor-based funds can heavily overweight certain sectors, such as the large allocations many dividend funds have to utilities and real estate investment trusts. 

For comparison, COWZ, whose index is made up of stocks from the Russell 1000, has a 38.6% concentration in the energy sector, while the iShares Russell 1000 ETF (IWB) has a 4.5% exposure to energy. 

Gabe Alpert is a former data reporter at etf.com with over seven years’ experience in financial journalism. He also previously contributed reporting and analysis to Barron’s Magazine, Investopedia and other publications.