Pacer US Small Cap Cash Cows ETF (CALF) Covered Calls

The Pacer US Small Cap Cash Cows 100 ETF (CALF) targets the top 100 companies in the S&P SmallCap 600 based on free cash flow yield. By prioritizing cash-rich firms over simple market cap, the fund identifies high-quality, undervalued small caps with the financial flexibility to fund growth, dividends, and buybacks.

You can sell covered calls on Pacer US Small Cap Cash Cows ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for CALF (prices last updated Tue 4:16 PM ET):

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Pacer US Small Cap Cash Cows 100 ETF (CALF) operates on a "quality-value" investment philosophy. Unlike traditional small-cap funds that weight by market capitalization, CALF utilizes a fundamental weighting scheme based on free cash flow (FCF) yield. This strategy aims to identify companies that are potentially undervalued but possess the financial flexibility to pay dividends, buy back shares, or reinvest in growth. The fund rebalances quarterly to capture shifts in market valuations and corporate profitability.

Core Strategy and Allocation

The fund construction process begins with the S&P SmallCap 600 Index. It excludes financial companies (except REITs) and firms with negative projected earnings. The remaining companies are ranked by their trailing 12-month free cash flow yield, and the top 100 are selected. As of April 2026, CALF is heavily tilted toward Consumer Discretionary (approx. 27%) and Information Technology (approx. 25%), reflecting a market where these sectors are generating significant cash surpluses. Top holdings include APA Corporation (APA), Zoom Video Communications (ZM), and Devon Energy (DVN), with individual weightings capped at 2% to maintain diversification.

Competitive Landscape

1. Pacer US Cash Cows 100 ETF is the large-cap sibling to CALF; while it targets different companies, it is the primary benchmark for the "Cash Cow" methodology and offers a highly liquid options market.
2. iShares Core S&P Small-Cap ETF is the most liquid broad-market competitor; it tracks the parent index of CALF and serves as the standard for small-cap volatility and option volume.
3. Avantis U.S. Small Cap Value ETF is a popular actively managed rival that targets similar factors like profitability and value, competing for investors seeking factor-based small-cap alpha.
4. Vanguard Small-Cap Value ETF represents the low-cost passive alternative for value-seeking investors, though it lacks the specific free-cash-flow yield tilt of CALF.
5. Schwab Fundamental U.S. Small-Cap Index ETF competes for investors who prefer fundamental weighting (sales, cash flow, and dividends) over traditional market-cap-weighting schemes.

Strategic Outlook and Innovation

The strategic focus for CALF in 2026 is the "normalization of small-cap valuations." Following a period where large-cap tech dominated, 2026 has seen a rotation into high-quality small caps that can self-fund their operations without relying on high-interest debt markets. Management has highlighted that CALF’s current FCF yield is significantly higher than the broader S&P 600, suggesting a "valuation cushion" for the fund. For the 2026 fiscal year, the fund has crossed the $3.3 billion AUM threshold, reflecting growing institutional interest in the "Cash Cow" series during periods of economic uncertainty.

Innovation within the fund is centered on its Active Fundamental Rebalancing. In 2026, Pacer has refined its index methodology to better account for R&D expenditures in technology firms, ensuring that high-growth companies with strong underlying cash generation aren’t unfairly penalized by traditional accounting metrics. Additionally, CALF has improved its "Tax-Aware" trading protocols to minimize capital gains distributions despite its high turnover rate (currently approx. 146%). By sticking to a disciplined, transparent, and objective rules-based process, CALF remains the premier vehicle for investors targeting the "Cash flow kings" of the small-cap world.

Want more examples? CAL Covered Calls | CALM Covered Calls