Most Investors Own VEA. Few Know About This International Cash Cows ETF
VEA dominates international portfolios, but a smaller rival fund uses a completely different logic to pick foreign stocks, and over the past five years it has quietly beaten the giant on both returns and income.
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Ask a retiree what covers the international piece of their portfolio, and chances are the answer is Vanguard FTSE Developed Markets ETF (NYSEARCA:VEA). It’s cheap, broad and simple. Far fewer people have heard of Pacer Developed Markets International Cash Cows 100 ETF (CBOE:ICOW). This fund picks foreign stocks by asking one question: how much spare cash does a company generate compared with its share price? Over the past five years, that approach has come out ahead of VEA.
How ICOW Picks Its Cash Cows
VEA weights companies based on market cap, so the largest companies in Europe, Japan, Canada and the Pacific get the biggest slices. ICOW starts with large and mid-cap non-U.S. companies in developed markets and follows a rules-based method that targets high free cash flow yield.
Free cash flow is the money a business has left after it pays its operating bills and invests in equipment and facilities. That cash pays for dividends, buybacks and debt reduction. Free cash flow yield divides that cash by the company’s market value. A high yield means investors pay relatively little for each dollar of cash the business produces, which gives the fund a natural value tilt.
Where ICOW Stands Apart From VEA
ICOW reported 100 positions, including a small money market account, as of July 31, 2026. No single holding exceeded 2.2222317628% of net assets. That top spot went to Takeda Pharmaceutical (NYSE:TAK | TAK Price Prediction), with KDDI, Deutsche Post and CK Hutchison close behind. This spreads the money far more equally than a cap-weighted index, which leans heaviest on its biggest names.
The sector mix also looks very different. Energy holdings are prominent, led by Shell (NYSE:SHEL) at 2.0925926423%, plus BP and Suncor Energy. Gold miners such as Barrick Mining and Agnico Eagle Mines show up, along with telecom carriers including Vodafone, Deutsche Telekom, Telefonica and Swisscom. The fund holds companies from 16 countries, with Canada, Japan, South Korea and the U.K. among them.
Here is how adjusted price performance compares:
| Period | ICOW | VEA |
|---|---|---|
| Year to date | 13.6% | 11.95% |
| One year | 17.08% | 16.62% |
| Five years | 65.03% | 52.89% |
Over longer periods, VEA comes out ahead. Since June 19, 2017, ICOW is up 129.78%. VEA’s 10-year gain is 159.54%, although that window starts several months earlier.
ICOW also pays more income. Over the trailing 12 months it distributed $1.734373 per share. At a price of $42.75, that works out to roughly 4.06%. VEA paid $1.7037 on a $69.28 price, or about 2.46%. ICOW’s payments vary a lot from quarter to quarter. Its September payout was $0.93833289, while March brought only $0.03786181.
VEA wins on cost with a 0.03% expense ratio. ICOW’s expense ratio is listed in Pacer’s fund documents. Rules-based strategy funds usually charge more than plain index funds, so check Pacer’s current prospectus before you compare net returns.
Why ICOW Still Flies Under the Radar
ICOW manages about $1.81 billion, which is modest next to Vanguard’s largest international fund. Pacer’s Cash Cows family includes U.S. funds, and many investors may default to cap-weighted international funds. Institutional interest looks thin as well: filings for the quarter ended June 30, 2026 showed D. E. Shaw selling its position. The fund’s irregular payouts also make it a poor fit for anyone who wants predictable, paycheck-style income.
Tradeoffs to Weigh Before Adding It
A cash-flow screen tends to load up on into commodity producers, so swings in oil and gold prices can move the fund sharply. Telecom holdings carry regulatory risk. A high free cash flow yield can also mean a stock is cheap for good reason. Currency moves and foreign dividend withholding taxes apply here just as they do with VEA. Because the portfolio is rebuilt by formula, it can turn over more than a broad index fund.
Who Should Take a Closer Look
ICOW may suit retirees who already own VEA and want to add a cash-flow and value tilt alongside it rather than replace their core holding. It may also appeal to investors looking for more international income who can live with uneven quarterly checks. Investors who care most about rock-bottom fees and maximum diversification may find VEA alone does the job.
If you’re researching ICOW, keep an eye on energy and gold prices, the fund’s quarterly rebalances, and whether its next distributions come close to September’s unusually large payment.
Contact [email protected] for any questions or corrections.
Jake has been been working in financial media for almost 15 years. He focuses on all things personal finance for 24/7 Wall St. with high hopes to educate and entertain. Most recently, Jake spent 12 years working various roles at The Motley Fool. He started copy editing fool.com content, worked on premium and marketing campaigns, and helped launch The Ascent, a personal finance brand.
His work has been featured on platforms like MSN, Yahoo Finance, USA Today, and more. He's written about credit cards, social security, ETFs, savings accounts, and just about anything else you can imagine when thinking about money. Jake love to cook, play golf, and tell people he's never had a cavity. (It's true!)
