Pacer US Small Cap Cash Cows ETF (CALF US) – Portfolio Construction Methodology

The underlying Pacer US Small Cap Cash Cows Index targets U.S. small caps drawn from the S&P U.S. SmallCap universe (bottom ~15% of the S&P U.S. BMI by float-adjusted market cap). Financials are excluded; Real Estate is treated separately. Securities are first filtered for capacity by 3-month ADTV, retaining the top 75% by traded value; constituents with negative forward two-year consensus free cash flow or earnings are removed. Remaining names are ranked by free-cash-flow yield (FCF/enterprise value). The top 100 are selected and weighted by trailing-12-month FCF, with a 2% cap per stock at each rebalance; weights may float between rebalances. The index reconstitutes and rebalances quarterly (March, June, September, December), using the second-Friday snapshot and implementing after the close on the third Friday.

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