The Pacer Developed Markets International Cash Cows 100 ETF (ICOW) stands out as a distinctive option for investors seeking exposure to large-cap international value stocks, primarily due to its strategic exclusion of financial sector companies. This particular ETF meticulously selects 100 stocks from the FTSE Developed ex-US Index. The core criterion for inclusion is a high free cash flow yield, which ultimately shapes a portfolio distinguished by a notably low average price-to-earnings (PE) ratio, reflecting a strong value-oriented approach.
Despite its unique methodology and focus on high cash flow, ICOW's performance trajectory has shown a tendency to lag behind that of other international value funds. This underperformance, coupled with an expense ratio of 0.65% and a trend of diminishing dividends, leads to a cautious assessment, consequently, the fund does not currently merit a 'Buy' recommendation. Nevertheless, the ETF could be a suitable consideration for a specific segment of investors. Those who already possess substantial allocations to financial stocks within other parts of their investment portfolios might find ICOW appealing. This is largely due to its deliberate exclusion of the financial sector and its pronounced tilt towards industrial and energy stocks, offering a diversification from their existing financial holdings.
It's crucial for investors to conduct thorough research and align their investment decisions with their individual financial objectives and risk tolerance. While ICOW presents an interesting strategy, its historical performance and cost structure warrant careful consideration. Future success hinges on various market factors and the continued efficacy of its unique stock selection criteria. Investors should consider whether ICOW's specific market exposure and investment philosophy complement their overall portfolio strategy.
