Pacer Deepens ETF Strategy with New Free Cash Flow-Focused Funds

MALVERN, PA – January 13, 2026 – Pacer ETFs has kicked off the new year with a significant strategic expansion, launching three new exchange-traded funds (ETFs) designed to offer investors more precise tools for navigating the market. The move signals a doubling-down on the firm's successful rules-based strategy centered on free cash flow (FCF), a key indicator of a company's financial health and operational efficiency.

The new offerings include the Pacer S&P 500 Quality FCF R&D Leaders ETF (QFRD), the Pacer S&P 500 Quality FCF High Dividend ETF (QFHD), and the Pacer International Export Leaders ETF (PIEL). These launches, coupled with an expansion of its sales management team, underscore Pacer's ambition to solidify its position as a leading provider of sophisticated, factor-based investment solutions.

With over $38 billion in assets under management as of the end of 2025, Pacer has carved out a substantial niche in the competitive ETF landscape. This latest product push aims to build on that momentum by providing what the firm's president, Sean O’Hara, calls a "toolkit that is as resilient as it is innovative."

A Deeper Bet on Free Cash Flow

The foundation for two of the new funds, QFRD and QFHD, is the Quality Free Cash Flow framework developed in collaboration with S&P Dow Jones Indices (S&P DJI). This methodology moves beyond simple revenue or earnings metrics to identify companies with consistently positive free cash flow, high FCF margins, and strong FCF return on invested capital. In essence, it seeks out businesses that are not just profitable on paper but are also efficient cash-generating machines.

This approach is not new for Pacer. The firm has already seen success with its Quality FCF Aristocrats series, including the Pacer S&P 500 Quality FCF Aristocrats ETF (LCOW). The new funds, however, add specialized layers to this core philosophy. They represent an evolution, moving from a broad quality screen to more targeted exposures.

"The S&P 500 Quality FCF R&D Leaders Index and the S&P 500 Quality FCF High Dividend Index show how free cash flow, when combined with other factors, can deliver enhanced exposures – whether supporting innovation and long-term growth or providing sustainable income," said Rupert Watts, Head of Factors and Dividends at S&P Dow Jones Indices. He noted that the launch reflects the strength of the ongoing collaboration with Pacer and a shared commitment to delivering transparent, rules-based solutions.

A Trifecta of Tools for Today's Investor

Each of the three new ETFs is designed to address a distinct investor objective, offering precision in portfolio construction.

The Pacer S&P 500 Quality FCF R&D Leaders ETF (QFRD) targets growth-oriented investors by screening S&P 500 companies for both high research and development (R&D) intensity and superior free cash flow margins. The resulting portfolio of 50 companies aims to capture firms that are aggressively reinvesting in future innovation without sacrificing the financial discipline that FCF analysis demands. This dual focus distinguishes it from many pure-play innovation funds that may include high-growth but cash-burning companies. QFRD seeks the best of both worlds: forward-looking growth potential anchored by current financial strength.

For income-focused investors, the Pacer S&P 500 Quality FCF High Dividend ETF (QFHD) offers a compelling proposition. The fund targets high dividend-yielding companies in the S&P 500 that have maintained consistent payments for at least five years. Crucially, it then applies the firm's signature FCF quality screen. Pacer describes this as a "rigorous health check on yield," designed to ensure that a company's dividend is supported by strong operational cash flow, not financial engineering or unsustainable payout ratios. In a market where high yields can sometimes be a warning sign, QFHD aims to separate the sustainable income plays from the potential value traps.

Rounding out the new suite is the Pacer International Export Leaders ETF (PIEL). This fund shifts the focus to the global stage, offering exposure to approximately 100 large- and mid-cap non-U.S. companies. Its unique screen identifies firms that derive a high percentage of their sales from foreign markets and demonstrate strong free cash flow margins. The strategy is designed to tap into companies with powerful global brand recognition and healthy balance sheets, providing investors with a tool for accessing international quality and long-term growth potential beyond broad-market index funds.

Competing in a Crowded Field

Pacer's strategic launches place it in direct competition with established players in the thematic and factor-based ETF space. The market for innovation, dividend, and international funds is crowded, but Pacer is betting that its specific, rules-based methodology will be a key differentiator.

For instance, while QFRD will compete for assets with broad technology funds and active innovation ETFs, its FCF quality screen offers a more conservative, quality-oriented approach to growth investing. Similarly, QFHD enters a field populated by well-known dividend growth and high-yield ETFs, but its explicit use of free cash flow as a sustainability metric provides a distinct value proposition for risk-aware income seekers.

PIEL, meanwhile, offers a more nuanced take on international investing than market-cap-weighted funds like those tracking the MSCI EAFE Index. By focusing on export leaders with strong cash flow, it targets a specific slice of the global market—financially robust companies that have successfully penetrated multiple international markets.

This push for differentiation is supported by an expansion of the firm’s distribution capabilities. Pacer announced it is also bolstering its sales management team with a new National Sales Manager and two regional managers. This two-pronged strategy—innovative products and a strengthened sales force—signals a clear intent to accelerate asset gathering and increase market share in 2026.

"Our focus in 2026 is providing advisors with a toolkit that is as resilient as it is innovative," stated Sean O’Hara, President of Pacer ETFs. This sentiment encapsulates the firm's broader mission: to equip investors and their advisors with strategic, thoughtfully constructed funds that can adapt to evolving market conditions, moving beyond generic exposures to target specific drivers of return.