Pacer Developed Markets Cash Cows Growth Leaders ETF (EAFG US) – Portfolio Construction Methodology

The underlying Pacer Developed Markets Cash Cows Growth Leaders Index provides exposure to developed markets ex-U.S. equities emphasizing companies that pair high free cash flow generation with solid growth characteristics. Starting from a broad developed-markets large- and mid-cap universe, the index applies standard investability filters for market cap, free float, and trading liquidity, then removes firms with negative or highly volatile free cash flow. Remaining stocks are ranked primarily by free cash flow yield and secondarily by growth metrics such as revenue and earnings trends, with a subset of the highest-ranked “cash cows” selected for inclusion. Constituents are weighted by a function of free cash flow, subject to stock, sector, and country caps to avoid excessive concentration in any one issuer or region. The index is reviewed and rebalanced on a regular quarterly schedule, with additions and deletions driven by updated cash-flow yields, growth signals, and investability screens.

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