Follow the Money With These Funds

Firms with healthy cash flows are great choices in dicey markets.

- ANNE KATES SMITH

In a volatile stock market that is still finding its footing, investors need low-risk options. That’s especially true as the economy flirts with recession. In this climate, shares of high-quality companies are your best shot.

A number of measures can mark an investment as high quality—a history of consistent earnings, pricing power for goods or services, limited share-price volatility, and the like. PACER US CASH COWS 100 zeros in on free cash flow, or the cash from operations that’s left after paying expenses, interest, taxes and any long-term investments in the business. That money can be used to pay dividends, buy back shares or acquire other businesses. “Companies with strong free-cash-generating ability can withstand economic volatility and support longer-term growth, while also rewarding shareholders through dividends and buybacks,” says Todd Rosenbluth, head of research for VettaFi.