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Index IDEA: Insight on high free cash flow stocks from PACER and FTSE Russell

According to Pacer Advisors, a global composite index comprised of the Pacer US Cash Cows 100 Index, Pacer Global Cash Cows Dividend Index and the Pacer Developed Markets International Cash Cows 100 Index, indexes which use an objective rules-based methodology to select and weight the 100 companies with the highest free cash flow yield, has risen 17% in 2017 as of September 29, outperforming its benchmark and value benchmark composite:

 

Pacer also found that companies with the highest free cash flow historically tend to outperform their broad benchmark during both growth and value-led markets over time according to index data. 

They examined annualized historical returns for the top 100 free cash flow companies in the Russell 1000 Index and the FTSE Developed ex-US Index relative to the Russell 1000 Index and FTSE Developed ex-US Index, respectively, during value and growth markets over time.

Results suggest that companies which exhibit higher free cash flow characteristics have performed well in both value-led cycles and growth-led cycles relative to their parent benchmark:

Michael Mack, Pacer Advisors, said:

"Despite one of the most challenging markets for value stocks in recent history, a composite index of high free cash flow yielding stocks has managed to outperform its benchmark composite index in 2017. And a closer examination of the performance of high free cash flow yield stocks during both growth- and value-led markets highlights the resiliency of high free cash flow yielding companies across multiple market cycles."


The Pacer US Cash Cows 100 Index, which is based on the US large cap Russell 1000 Index, serves as the basis for the Pacer US Cash Cows 100 ETF (COWZ). The Pacer Global Cash Cows Dividend Index, which is based on the FTSE Developed Large Cap Index, serves as the basis for the Pacer Global Cash Cows Dividend ETF (GCOW). And the Pacer Developed Markets International Cash Cows 100 Index, which is based on the FTSE Developed ex US Index, serves as the basis for the Pacer Developed Markets International Cash Cows 100 ETF (ICOW). For more information US and global indexes from FTSE Russell, go to the FTSE Russell website.

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Cash Cows IndexSM is a trademark of Index Design Group, LLC.

Distributor: Pacer Financial, Inc, member FINRA, SIPC, an affiliate of Pacer Advisors, Inc.

 

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All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.

Views expressed by Michael Mack of Pacer Advisors are as of October 16 and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE Russell Indexes or the fitness or suitability of the indexes for any particular purpose to which they might be put.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

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Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back- tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.

This publication may contain forward-looking statements. These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statements speak only as of the date they are made and no member of the LSE Group nor their licensors assume any duty to and do not undertake to update forward-looking statements.

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