Investors believe that “cash is king” in the current environment of persistent inflation, high interest rates, and a potential economic slowdown. As a result, ETFs focused on companies that generate a substantial amount of cash have garnered significant interest from investors this year.
According to the legendary investor Warren Buffett, free cash flow—the cash remaining after a company has covered expenses, interest, taxes, and long-term investments—is the most crucial valuation metric.
Buffett favors companies that generate more cash than necessary for their operational needs. Such companies can utilize free cash flow to reduce debt, distribute the cash to investors through dividends or buybacks, or reinvest in their operations.
The Pacer U.S. Cash Cows 100 ETF COWZ selects 100 US companies with strong cash flows and healthy balance sheets, from the Russell 1000 index. It has over $14.4 billion in assets. Chevron CVX and Marathon Oil MRO are its top holdings.
The VictoryShares Free Cash Flow ETF VFLO holds profitable large-cap companies that not only have high free cash flow yields but also favorable growth prospects.
The Global X U.S. Cash Flow Kings 100 ETF FLOW and the First Trust S&P 500 Diversified Free Cash Flow ETF FCFY are the newest entrants in the space.
Chevron Corporation (CVX): Free Stock Analysis Report
Marathon Oil Corporation (MRO): Free Stock Analysis Report
GLB-X US CF K1 (FLOW): ETF Research Reports
Pacer Us Cash Cows 100 ETF (COWZ): ETF Research Reports
VictoryShares Free Cash Flow ETF (VFLO): ETF Research Reports
FT-SP5 FR CA FL (FCFY): ETF Research Reports
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