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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