Sumit Roy
3 min read
The Pacer US Small Cap Cash Cows ETF (CALF) has fallen sharply out of favor in 2025, as a dramatic reversal in performance has triggered a flood of outflows from the once-high-flying fund.
Year to date, investors have yanked $2.6 billion from the ETF, the 12th-largest outflow among all U.S.-listed exchange-traded funds. That exodus, combined with deep losses, has slashed the fund’s assets by nearly half—from $8.1 billion at the start of the year to $4.3 billion today. At its peak in 2024, CALF had just under $10 billion in assets.
The sharp reversal underscores how quickly investor sentiment can shift.
CALF’s recent struggles have been particularly stark given its meteoric rise in prior years. From just $1 billion in assets in October 2022, the fund ballooned to nearly $10 billion in April 2024 thanks to blistering 2023 performance.
That year, the ETF surged 35%, roughly double the returns of the biggest small-cap ETFs, including the iShares Russell 2000 ETF (IWM), the Vanguard Small-Cap ETF (VB) and the iShares Core S&P Small-Cap ETF (IJR).
But the magic didn’t last. In 2024, CALF dropped 7.4% even as its small-cap peers gained between 8% and 15%. And in 2025, the performance gap has only widened. As of now, the fund is down 12.5% on the year, compared to a 6.9% decline for IWM, a 4.7% drop for VB and an 8.2% loss for IJR.
CALF’s underperformance reflects both its concentrated nature and its unique strategy. While IWM, VB and IJR track broad, market cap-weighted indexes with hundreds or even thousands of holdings—none of which typically make up more than 0.5% of the portfolio—CALF is much more selective.
The ETF chooses 200 companies with the highest free cash flow yields (free cash flow divided by enterprise value) from the small-cap universe. It’s a value-leaning approach but one distinct from traditional value screens, such as those that emphasize price-to-book or price-to-earnings ratios.
As a result, CALF’s portfolio is relatively concentrated, with the top 10 holdings making up around 20% of assets and the top 20 more than 35%. Individual stocks can carry weights of 2% or more. That’s not unusually high for ETFs overall, but it’s elevated compared to other broad small-cap funds.
Unfortunately for CALF, many of its top holdings have fared poorly in the past year and a half. Just five companies—Xerox Holdings Corp. (XRX), Alpha Metallurgical Resources Inc. (AMR), Peabody Energy Corp. (BTU), Signet Jewelers Limited (SIG) and Ironwood Pharmaceuticals Inc. (IRWD)—have collectively wiped nearly six percentage points off the fund’s returns since the start of 2024.
