Pacer Developed Markets International Cash Cows 100 ETF (ICOW) seeks to track the Pacer Developed Markets International Cash Cows Index, which selects the 100 highest free cash flow yielding companies from developed international markets excluding the U.S. This international equity ETF focuses on cash-generating businesses across Europe, Japan, and other developed economies.
How It Works
ICOW uses a rules-based methodology that screens developed international markets for companies with the highest free cash flow yields, calculated as free cash flow per share divided by stock price. The index selects the top 100 qualifying companies and weights them by free cash flow yield, giving higher allocations to the strongest cash generators. Holdings are reconstituted and rebalanced quarterly to maintain focus on current cash flow leaders across various sectors and countries.
Key Features
- Focuses exclusively on free cash flow yield rather than traditional metrics like dividends or earnings multiples
- Provides concentrated exposure to just 100 international companies with strongest cash generation capabilities
- Offers 2.05% dividend yield from cash-rich international businesses often overlooked by broad market indices
Risks
- This ETF can lose value if international markets underperform U.S. stocks, as has occurred frequently over the past decade
- Concentrated portfolio of only 100 holdings creates higher single-stock risk compared to broad international market ETFs with thousands of positions
- Currency fluctuations can reduce returns when foreign currencies weaken against the U.S. dollar, adding volatility beyond stock performance
Who Should Own This
Best suited as a satellite holding (5-15% of international allocation) for investors with 3+ year time horizons seeking cash flow-focused international exposure. Medium-to-high risk tolerance required due to concentration and international market volatility. Appeals to value-oriented investors wanting alternatives to traditional international index funds dominated by growth stocks.