Pacer US Small Cap Cash Cows Growth Leaders ETF

Pacer US Small Cap Cash Cows Growth Leaders ETF (CAFG) is an index fund that picks 100 stocks from the S&P SmallCap 600 with the highest free cash flow margins (spare cash as a share of sales) and tilts toward those with strong price momentum. As of October 27, 2026, its three-year return beat five similar small-cap funds, but at 0.59% a year it costs more than double the 0.26% peer average.

• Over the year to Oct 27, 2026, CAFG returned +31.3%, 2nd of 7 among similar funds.
• Its worst full calendar year was 2025 (+0.2%); its best was 2024 (+6.9%).
• The deepest fall in its price history was 23.7% (Nov 11, 2024 to Apr 8, 2025), recovered by Jan 22, 2026.

As of Jul 31, 2026, the fund held 100 securities; the ten largest made up 24.86% of assets. It also reported 12.39% in a money-market fund, most likely cash collateral from lending out shares rather than uninvested money.

• Over the three months to Jul 31, 2026, investors added a net $4.9M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +4.01%, +8.26%, -1.51%.

CAFG is an index fund tracking the Pacer US Small Cap Cash Cows Growth Leaders Index, designed by Index Design Group, an affiliate of Pacer Advisors, the fund's adviser. The starting list is the S&P SmallCap 600, an index of smaller US companies. It drops financial and real estate companies and any company with negative projected free cash flow or earnings over the next two fiscal years. Free cash flow is cash from operations minus spending on equipment and other long-term assets.

The remaining companies are ranked by free cash flow margin (free cash flow divided by sales) over the trailing twelve months. The 100 highest, the "cash cows," are included. Weights follow price momentum, not company size: stocks with stronger relative gains over about six months get more weight, and weaker ones get less. Each stock is capped at 5%. As of June 30, 2026, index companies ranged from $514 million to $7.9 billion in market value, with significant exposure to technology, industrials and health care.

The index is rebuilt and reweighted quarterly, on the third Friday of March, June, September and December. The fund generally holds every index stock in matching proportions. That means heavy trading: portfolio turnover (the share of holdings replaced in a year) was 125%, and trading costs come on top of the 0.59% expense ratio.

• CAFG charges 0.59% a year, versus an average of 0.26% for the similar funds below (7th of 7, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $60 in the first year and $738 over 10 years (assuming a 5% annual return).

CAFG is a momentum-weighted basket of 100 small US companies with a 0.59% fee, a record dating only to May 2023 and a 23.7% peak-to-trough drop, so it fits better as a modest add-on than as a foundation.

CAFG could add a tilt toward cash-generating smaller US companies, but its record is short. It launched on May 2, 2023, so it missed the 2008 financial crisis, the 2020 COVID crash and the 2022 bear market. Its deepest drop was 23.7%, from November 11, 2024, to April 8, 2025, and it took about 9.5 months to recover. Anyone selling shares for spending money during that stretch would have sold at depressed prices. Both of its full calendar years were gains: 6.81% in 2024 and 0.27% in 2025, its weakest.

It is not an income fund: its 12-month yield was 0.32% as of October 27, 2026, paid quarterly. Costs are high. In the SEC's standard example ($10,000 invested, 5% yearly return), expenses total about $60 after one year and $738 over ten. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.