COWG Is Up While QQQ Slips. What the Free Cash Flow Screen Is Actually Doing

"The fund's core premise is that companies generating more cash than they spend are structurally healthier than those chasing growth at any cost. Pacer applies a rules-based screen targeting projected free cash flow yield and earnings growth, then builds a concentrated portfolio of the companies that pass."

"The portfolio leans heavily into two sectors. Information technology makes up 49.2% of holdings, with healthcare at 23.4%, together accounting for nearly three-quarters of the fund. Top positions include semiconductor equipment names like Lam Research and KLA Corp alongside specialty pharma and biotech companies like Medpace Holdings and Regeneron."

"Over the past year, COWG returned 8% while SPY returned 17.25% over the same period. That's a meaningful gap. Where COWG does hold an edge recently is against the Nasdaq-100: COWG is up 0.26% year-to-date versus QQQ down 1.14%."

Pacer US Large Cap Cash Cows Growth Leaders ETF (COWG) uses a rules-based screening methodology targeting companies generating more cash than they spend, viewing this as a sign of structural health. The $2.4 billion fund, launched in December 2022 with a 0.49% expense ratio, concentrates heavily in information technology (49.2%) and healthcare (23.4%), including semiconductor equipment and specialty pharma companies while maintaining zero allocation to financials. Performance has been mixed: COWG returned 8% over the past year versus SPY's 17.25%, though it outperformed the Nasdaq-100 year-to-date. Since inception, COWG returned approximately 79%, outpacing inflation but trailing the S&P 500 over the same period.

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