Free cash flow is having a moment. After years of investors tolerating companies that burned cash in the name of growth, the pendulum is swinging back toward balance sheet discipline. Pacer ETFs is leaning into that shift hard.
On Tuesday, the firm rolled out three new strategic funds designed for investors rebalancing portfolios with 2026 expectations in mind. The lineup includes 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). Together, they represent an attempt to blend growth, income, and financial health in a market where leadership credentials and dividend reliability are under closer scrutiny than ever.
Growth Companies That Actually Make Money
QFRD tracks the S&P 500 Quality FCF R&D Leaders Index, which zeroes in on 50 companies from the S&P 500 that combine high research and development spending with strong free cash flow margins. The idea is straightforward: find companies reinvesting heavily in their future, but doing so without lighting their cash pile on fire. It's growth investing with guardrails.
Dividends You Can Actually Trust
QFHD takes a different angle, tracking the S&P 500 Quality FCF High Dividend Index. This fund hunts for high dividend payers within the S&P 500 that have maintained payouts for at least five years and demonstrate quality free cash flow generation. By adding FCF as a screening layer, the ETF emphasizes dividend sustainability over raw yield chasing. The goal is to give investors income from companies with the operational health to keep those checks coming, not just companies offering tempting yields that might evaporate.
Both funds deepen Pacer's Quality FCF franchise and mark the latest chapter in the firm's partnership with S&P Dow Jones Indices. The collaboration has now produced five funds in the past 12 months.
International Exposure With Balance Sheet Discipline
Rounding out the trio, PIEL targets roughly 100 large- and mid-cap non-U.S. companies with high levels of foreign sales and strong free cash flow margins. It's positioned as a way for investors to gain international exposure to globally competitive businesses that also happen to have solid balance sheets and durable growth prospects.
Rupert Watts, head of factors and dividends at S&P Dow Jones Indices, said the new indices showcase how free cash flow can be combined with other factors to deliver different exposures, whether targeting long-term growth through innovation or sustainable income.
The timing feels deliberate. In an environment where profit quality and cash generation are back in vogue, Pacer is offering investors a toolkit built around the idea that how a company makes money matters just as much as whether it grows.