Ongoing market uncertainty has left financial advisors at a strategic crossroads, as questions around tariffs, tax policy, corporate earnings, and Federal Reserve decisions fuel volatility. Some advisors are leaning into risk, seeing opportunity in the chaos; others are pulling back, prioritizing defensiveness and looking beyond U.S. borders for stable returns.
Against this backdrop, one exchange-traded fund (ETF) has quietly gained traction for its clear, rules-based approach, emphasizing free cash flow and dividend strength: the Pacer Global Cash Cows Dividend ETF (ticker: GCOW). GCOW offers a targeted way to combine international diversification with income and quality, rebalancing semiannually to maintain discipline in its strategy and ensure consistency as markets shift.
In an interview with The Wealth Advisor’s Scott Martin, Sean O’Hara, President of Pacer ETF Distributors, discussed the renewed interest in international strategies and how GCOW offers a differentiated way to gain global exposure while prioritizing income and quality.
GCOW: A Global Free Cash Flow Approach
GCOW takes a disciplined, two-step approach to global investing. Starting with the FTSE Developed Large Cap Index—containing both U.S. and international names—the strategy first identifies the top 300 companies by free cash flow yield, then narrows the list to the top 100 dividend payers. The result is a portfolio of high-quality, cash-generative businesses with the capacity to deliver income, regardless of geography.
“You wind up owning high-quality, profitable companies, some in the U.S. and some outside the U.S.,” O’Hara explains. “You’re being very selective.” By focusing on fundamentals rather than location, GCOW offers a more intentional solution for international equity exposure.
“By screening for free cash flow yield, you wind up screening for companies that are highly profitable that also have the wherewithal to pay very, very attractive dividends,” he says. The approach provides a potential solution to address international allocation needs while maintaining focus on company fundamentals rather than geographic quotas.
How GCOW Differs from Traditional International Funds
Traditional international indices often include less-dynamic companies from economies that may not match U.S. economic growth, limiting profitability. “You have a lot of names that are sort of sleepy in those international indexes,” O’Hara notes. GCOW addresses the challenge of underperforming international companies through its focus on cash flow metrics, selecting only businesses demonstrating financial strength regardless of their economic environment.
Additionally, GCOW deliberately avoids preset country or sector allocations: “There are no country-specific guidelines, no sector guidelines,” says O’Hara. Since the strategy is sector and country agnostic, allocations are dictated by the data. “If all of them wind up in one particular country, then that’s fine with us,” he adds.
The fund also excludes financials—common in international benchmarks—because their business models make it difficult to measure free cash flow accurately. “You’re sort of stepping aside from that big international bank exposure, which has not necessarily been a great place to be recently,” O’Hara explains.
Yield, Resilience, and Quality
GCOW’s emphasis on profitability and dividends has led to lower volatility and stronger downside performance. According to Pacer, companies with high free cash flow and dividend yield tend to be more resilient during drawdowns. Those seeking to build defensiveness into portfolios without sacrificing upside can leverage GCOW’s focus on financial resilience while maintaining exposure to global markets.
O’Hara points out that current valuations have brought opportunities for investors ready to reengage. “When you see a decline of 15% or more, you’re buying stuff cheaper than it was, and the numbers will dictate that if you look forward, your returns are somewhat competitive and attractive,” he says.
The “cushion” from dividend income combined with quality screening creates a compelling case for advisors who need to balance income requirements with growth potential. In a world where yield remains a priority for many clients, GCOW’s approach offers a disciplined alternative to chasing dividends without regard for underlying business strength or sustainability.
Global Exposure Without Blind Allocation
One of the most persistent challenges with international investing is navigating the uneven nature of global economies. Many traditional indices allocate by market capitalization or geography, often resulting in portfolios heavy with slow-growth, state-influenced businesses. GCOW, by contrast, applies a meritocratic process—companies must earn their place based on output not origin.
“Eventually, all things will rotate,” O’Hara says. “We’re not really dogmatic about the way we create the portfolio. It’s 100% rules based.”
As of early May, GCOW holds approximately 26% in U.S. stocks, with the rest spread across the United Kingdom (13%), France (11%), Japan (10%), Switzerland, Germany, Hong Kong, Australia, and Canada. Sector exposure is similarly diversified, with energy (20%), healthcare (18%), and consumer staples (17%) making up the largest portions, with notably less exposure to information technology.
The real-world allocation demonstrates the ETF’s underlying flexibility while maintaining consistency in applying its core philosophy. Investors gain access to global names with strong cash positions and healthy dividends without the constraints of traditional benchmarks.
The data-driven flexibility is what sets GCOW apart: it doesn’t chase trends or adhere to outdated allocation models. Instead, it builds a portfolio of global leaders based on measurable financial strength. For those seeking intentional diversification—not just international exposure for exposure’s sake—GCOW offers a focused path toward capturing global opportunity with discipline, durability, and income at the core.
Positioning Within a Portfolio
After years of domestic outperformance, many portfolios have become overweight in U.S. equities. GCOW provides a selective way to restore international balance with a quality fulcrum.
“Given U.S. valuations versus global or international valuations, and then given the dividend yield that you’re getting on GCOW today,” O’Hara says, “maybe going back to a traditional balance of somewhere around 20–25% international on your equity sleeve makes sense.”
GCOW is not designed to mimic broad international indices. Instead, it offers advisors a selective toolkit to reintroduce global exposure that emphasizes income and durability. Advisors concerned about timing need not worry about being too late to act.
The Broader Philosophy
GCOW is part of a family of strategies at Pacer built around the Cash Cows Index philosophy, which uses free cash flow as a key metric of company strength. The same philosophy informs other strategies such as the value-oriented Pacer US Cash Cows 100 ETF (COWZ) and the growth-oriented Pacer US Large Cap Cash Cows Growth Leaders ETF (COWG). The unifying thread is a focus on real-world financial health, not theoretical valuations or sector trends.
“What we like to do at Pacer, whether it’s risk management or value or growth, is just to provide solutions for financial advisors that they can implement as a part of their portfolio that act like a counterbalance,” O’Hara says. “COWZ is a great counterbalance to traditional value . . . COWG is our growth story. We use free cashflow margin there.”
GCOW completes the picture for global income and diversification. Advisors might deploy this strategy as part of a broader cash flow–driven approach or as a stand-alone global income solution.
Opportunity in Precision
In a climate where traditional international strategies often fall short—dragged down by legacy sector weightings or economic stagnation—GCOW stands apart. Its rules-based methodology, focused on free cash flow and dividends, is designed to deliver global exposure without sacrificing selectivity. By filtering for companies that generate real profits and avoiding arbitrary country or sector caps, GCOW provides a refined way to participate in global markets with quality and clarity in a murky investment environment.
Whether used as a separate international equity position or as part of a broader strategy centered on income and quality, GCOW aims to give advisors a practical tool to address today’s investment challenges.
As O’Hara puts it, “Profits drive stock prices in the long run.” GCOW is built to find them—no matter where they are.
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Disclosures
This content is intended for financial advisors only.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges, and expenses. This and other information is in the prospectus. A copy may be obtained by visiting www.paceretfs.com or calling 1-877-577-2000. Please read the prospectus carefully before investing.
An investment in the Funds is subject to investment risk, including the possible loss of principal. Pacer ETF shares may be bought and sold on an exchange through a brokerage account. Brokerage commissions and ETF expenses will reduce investment returns. There can be no assurance that an active trading market for ETF shares will be developed or maintained. The risks associated with this fund are detailed in the prospectus and could include factors such as calculation methodology risk, concentration risk, currency exchange rate risk, equity market risk, ETF risks, foreign securities risk, geographic concentration risk, large-capitalization investing risk, passive investment risk, style risk, tracking risk, and/or special risks of exchange traded funds.
NOT FDIC INSURED | MAY LOSE VALUE | NOT BANK GUARANTEED
Distributor: Pacer Financial, Inc., member FINRA, SIPC, an affiliate of Pacer Advisors, Inc.
