Advisors have different words for rotation tactics that aim to align strategies with value or growth shifts. Some call them opportunity. Others call them a headache. Most call them both—because even when you see the shift coming, executing on it cleanly is rarely simple.
Considering this challenge, the question the team at Pacer ETFs kept coming back to was deceptively simple: What if advisors didn’t have to choose between growth and value at all—at least not actively?
“It’s an idea that we’ve been looking at for a long time, which is to find something that would take advantage of that growth and value rotation so that by making that switch or by increasing or decreasing your allocations, you didn’t have to worry about that friction, which is taxation,” Sean O’Hara, President at Pacer ETFs tells The Wealth Advisor’s Scott Martin.
The Pacer Cash COWZ 100-Nasdaq 100 Rotator ETF (ticker: QQWZ) aims to handle the growth-to-value switch automatically—and do it in a way that sidesteps the tax drag that typically makes rotation so costly.
The Setup: Two Portfolios, One Decision
At any given time, QQWZ holds one of two distinct portfolios: either the 100 stocks of the Nasdaq-100, which serves as the growth leg, or the 100 stocks of the Pacer US Cash Cows 100 Index (COWZ index), which anchors the value side. Every month, a relative strength screen evaluates momentum across one, three, six, nine, and 12-month periods on an equally weighted basis. If the screen signals a shift, the portfolio rotates accordingly—no committees, no discretionary overrides, no delays.
The pairing of the Nasdaq-100 and COWZ index is key. O’Hara sees the Nasdaq-100 as arguably the strongest available growth index, and COWZ as a fundamentally sound value barometer—two complementary building blocks that, until now, required an active hand to manage in tandem. Combining them into a single, rules-based structure was the natural conclusion: one ticker that holds whichever of the two the momentum data favors at any given moment.
“We think that COWZ is a phenomenal value story,” O’Hara says. “So, we sort of put them both together like peanut butter and jelly, if you will.”
The monthly screen doesn’t try to anticipate the market—it reads it. Consistency is what the strategy is built around. “We don’t really feel like it’s necessary for us to get it perfect every time,” he adds. “We just have to get enough of it to make a difference.”
The Tax Argument: Why the ETF Wrapper Changes Everything
Advisors who actively manage growth-value rotation know the pain point well: even when you’re right about the shift, acting on it can create a taxable event. A client sitting on significant gains in a growth position may resist trimming, not because they disagree with the thesis but because the tax bill makes the move feel punitive. The decision is deferred, the portfolio drifts, and the rotation opportunity passes.
QQWZ’s ETF structure makes the difference. The fund can rebalance through a mechanism that allows the portfolio to shift without triggering capital gains distributions. Gains accumulated during the Nasdaq-100 phase can roll directly into the COWZ holdings, continuing to compound rather than being partially surrendered to taxes.
O’Hara considers tax efficiency the fund’s critical feature—more important, even, than getting the rotation timing right. Investors, he notes, often recognize when it’s time to trim or rebalance but “that tax liability oftentimes deters those investors from making the decision.” What QQWZ offers instead is continuity—the gains stay in the portfolio, working. “Because it’s an exchange-traded fund, we can rebalance through custom in-kind creation/redemption baskets and preserve all of your gains,” he says, “and let that go into the next set of stocks, the COWZ stocks, and compound and grow from there.”
The ability to move between growth and value without generating a tax event means the strategy can function the way it’s designed to—capturing market leadership shifts without forcing clients into a trade-off between sound portfolio management and optimal after-tax returns.
Relative Strength as the Engine
The monthly screen driving QQWZ’s rotation decisions is built on relative strength—a well-established momentum-based methodology that measures which asset is trending with greater persistence. It’s not a macroeconomic overlay, and it doesn’t rely on fundamental forecasts or interest rate predictions. The system evaluates price momentum across five time periods and acts on what the data show.
Relative strength caught the rotation from growth to value that began late in 2024. QQWZ had been positioned in the Nasdaq-100 through January 2025, capturing the previous year’s gains in full. When the screen signaled a shift, the fund moved into COWZ—right as value began to outperform more broadly. O’Hara is careful not to frame the rotation as perfect timing, but the sequencing was notable.
“Relative strength is a pretty well-known strategy that gets applied to portfolios,” he says. “Historically over time, what we think you’ll see is that you can produce very attractive returns by constantly, over time, moving the portfolio from one to the other without having to worry about the taxation.”
The COWZ side of the portfolio also rebalances on its own schedule—quarterly—selecting the 100 stocks with the highest free cash flow yield from the Russell 1000 Index. Because COWZ doesn’t rely on traditional price-to-book metrics, the portfolio avoids the heavy sector concentration in financials, real estate, and utilities that characterizes many conventional value strategies.
Instead, it seeks companies generating strong cash relative to enterprise value—businesses with better earnings growth than the benchmark, higher current free cash flow yield, and a meaningful discount to the market’s price-to-earnings (P/E) ratio.
“You wind up with a 100-stock portfolio that gets better earnings growth than the benchmark, has a higher current free cashflow yield, and then trades at a pretty substantial discount to the market’s P/E,” O’Hara points out.
Where QQWZ Fits in a Portfolio
Most advisors already manage growth and value exposure—often through separate sleeves, with tactical tilts applied based on market view. QQWZ isn’t designed to replace that framework. The goal is to take a portion of the work off the table.
O’Hara suggests thinking about QQWZ as a bridge between the two sleeves. If large-cap U.S. equities make up roughly 25% of a client’s portfolio, split between growth and value, the mechanics are simple enough to act on today.
“So, take a little bit of weight out of your constant growth and a little bit of weight out of your constant value, and put that into QQWZ,” he says. A 5–10 percentage point allocation can create a self-managing middle layer that’s always watching relative strength and trying to determine where it should be positioned going forward. “That sort of solves that problem for you, if you will,” O’Hara adds.
The core growth and value positions remain intact, and the advisor retains full flexibility to make strategic adjustments on top. “You can be more tactical as the advisor underneath by increasing your value or increasing your growth on your own,” O’Hara explains. “But we’re going to toggle back and forth, and hopefully, we’ll get the timing right. Over time, we hope we’ll be able to produce excess returns. That’s the goal.”
QQWZ launched in May 2025 and carries a net expense ratio of 0.49% as of early March 2026, trading on the Nasdaq. The live track record is still young, but the underlying components—COWZ and the Nasdaq-100—carry well-documented histories, and the index methodology behind QQWZ has its own longer-running story to tell.
The Bigger Picture
Value investing spent several years in the wilderness while mega-cap growth dominated. COWZ’s approach—anchored in free cash flow yield rather than accounting-based valuation multiples—kept the strategy more diversified and arguably more durable across different parts of the cycle. With rotation back in focus, QQWZ offers a way to stay on the right side of market leadership without requiring advisors or clients to make a fresh active call each time sentiment shifts.
The fund seeks to do something that sounds simple but has historically been difficult to execute cleanly: move between growth and value systematically, efficiently, and without the tax consequences that typically chip away at the strategy’s net return. Whether deployed as a stand-alone rotator or as a complement to existing core positions, the underlying logic holds—let the rules-based process handle the heavy lifting, and stay focused on the parts of portfolio management that genuinely benefit from a human hand.
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Additional Resources
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Disclosures
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 1-877-337-0500. 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, equity market risk, ETF risks, high portfolio turnover risk, index provider risk, large- and mid-capitalization investing risk, new fund risk, non-diversification risk, passive investment risk, sector risk, tracking error risk, and/or special risks of exchange traded funds.
Free Cash Flow Yield (Free Cash Flow/Enterprise Value) measures a company’s total free cash flow relative to its enterprise value. This is an internal statistic and does not constitute investor yield.
The Pacer COWZ NDX Rotator Index was released on 5/2/2025. The Pacer US Cash Cows 100 Index was released on 12/8/2016. The Nasdaq-100 Index® was released on 1/31/1985.
The financial instrument is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade mark or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trade mark for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument.
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