VictoryShares’ lineup of free cash flow ETFs has seen continued interest among investors.
The VictoryShares Free Cash Flow ETF (VFLO) and the VictoryShares Small Cap Free Cash Flow ETF (SFLO) attracted strong interest and healthy flows in February 2024. VFLO saw over $31 million in net flows between February 1 and February 29, while the younger SFLO saw nearly $11 million during the same period, according to ETF Database.
VFLO, launched in June 2023, has $175 million in assets under management as of March 22. Meanwhile, SFLO, launched in December 2023, has already accreted $43 million in AUM as of March 22.
The construction of these funds uses the same innovative methodology, with each providing nuanced exposure to a different segment of the U.S. market.
VFLO and SFLO offer exposure to high-quality companies trading at a discount with favorable growth prospects. We believe the ETFs’ focus on companies with higher expected free cash flow yields and high expected growth rates sets them apart from traditional value-oriented category peers.
“High-quality companies with strong free cash and room for growth are appealing to investors concerned about volatility,” said Todd Rosenbluth, head of research at VettaFi.
Comparing 2 Free Cash Flow ETFs
Free Cash Flow (FCF) is the cash a company has left after paying expenses, interest, and taxes, and reinvesting in the business. It can be used to buy back stock, pay dividends, or participate in mergers and acquisitions. Free cash flow is a valuable metric for evaluating companies’ investment cases.
VFLO provides exposure to profitable U.S. large-cap companies with high free cash flow yields. The ETF seeks to track the performance of the Victory U.S. Large Cap Free Cash Flow Index and its top holdings as of March 31 include Cigna Group (CI), Centene Corporation (CNC), Lennar Corporation Class A (LEN), CVS Heath Corporation (CVS) and Exxon Mobile Corporation (XOM).
See more: “VFLO or SFLO: Which Free Cash Flow ETF Is Right for You?”
Conversely, SFLO provides U.S. small-cap exposure. The ETF tracks the Victory U.S. Small Cap Free Cash Flow Index.
SFLO’s top holdings as of March 31 include Globus Medical Inc Class A (GMED), Dillard’s, Inc Class A (DDS), Scorpio Tankers Inc. (STNG), HF Sinclair Corporation (DINO) and Roivant Sciences Ltd. (ROIV).
VFLO’s Top Ten Holdings as of 3/31/2024 |
Weighting |
Ticker |
| Cigna Group | 4.03% | CI |
| Centene Corporation | 3.62% | CNC |
| Lennar Corporation Class A | 3.34% | LEN |
| CVS Health Corporation | 3.31% | CVS |
| Exxon Mobil Corporation | 3.21% | XOM |
| Chevron Corporation | 3.13% | CVX |
| Elevance Health, Inc. | 3.08% | ELV |
| Expedia Group, Inc. | 2.77% | EXPE |
| QUALCOMM Incorporated | 2.52% | QCOM |
| Skyworks Solutions, Inc. | 2.49% | SWKS |
SFLO’s Top Ten Holdings as of 3/31/2024 |
Weighting |
Ticker |
| Globus Medical Inc Class A | 1.59% | GMED |
| Dillard’s, Inc. Class A | 1.53% | DDS |
| Scorpio Tankers Inc. | 1.50% | STNG |
| HF Sinclair Corporation | 1.43% | DINO |
| Roivant Sciences Ltd. | 1.34% | ROIV |
| Graham Holdings Co. Class B | 1.33% | GHC |
| Mueller Industries, Inc. | 1.31% | MLI |
| International Seaways, Inc. | 1.30% | INSW |
| Cleveland-Cliffs Inc | 1.29% | CLF |
| Avnet, Inc. | 1.26% | AVT |
A full list of top holdings and weights can be accessed here for VFLO and here for SFLO.
VettaFi LLC (“VettaFi”) is the index provider for VFLO and SFLO, for which it receives an index licensing fee. However, VFLO and SFLO are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of VFLO and SFLO.
For more news, information, and analysis, visit the Free Cash Flow Channel.
Disclosure Information
Carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. To obtain a prospectus or summary prospectus containing this and other important information, visit http://www.vcm.com/prospectus. Read it carefully before investing. All investing involves risk, including the potential loss of principal.
Please note that both Funds are new ETFs with a limited history. The ETFs have the same risks as the underlying securities traded on the exchange throughout the day. Redemptions are limited, and commissions are often charged on each trade. ETFs may trade at a premium or discount to their net asset value. The ETFs invest in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the ETFs may diverge from that of their respective Indexes. Investments concentrated in an industry or group of industries may face more risks and exhibit higher volatility than investments that are more broadly diversified over industries or sectors. Derivatives may not work as intended and may result in losses.
Additional Information
Large shareholders, including other funds advised by the Adviser, may own a substantial amount of the ETFs’ shares. The actions of large shareholders, including large inflows or outflows, may adversely affect other shareholders, including potentially increasing capital gains. Investments in small- and mid-cap companies typically exhibit higher volatility and may involve greater risks than those associated with larger, more established companies. Investing in companies with high free cash flows could lead to underperformance when such investments are unpopular or during periods of industry disruptions.
The ETFs could also be affected by company-specific factors that could jeopardize the generation of free cash flow. The value of your investment is also subject to geopolitical risks such as wars, terrorism, environmental disasters, and public health crises; the risk of technology malfunctions or disruptions; and the responses to such events by governments and/or individual companies. The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. The securities highlighted, if any, were not intended as individual investment advice.
Fund Information
The Victory U.S. Small Cap Free Cash Flow Index aims to select high quality companies from its starting universe by applying profitability screens. It then selects companies with the strongest free cash flow yield that exhibit higher growth. The Index is rebalanced and reconstituted quarterly. This Index calculates free cash flow yield by dividing expected free cash flow by enterprise value. Expected free cash flow is the average of trailing 12-month FCF and next 12-month forward free cash flow. Enterprise value (EV) measures a company’s total value, often used as a more comprehensive alternative to equity market capitalization.
The Victory U.S. Large Cap Free Cash Flow Index aims to select high quality companies from its starting universe by applying profitability screens. It then selects companies with the strongest free cash flow yield that exhibit higher growth. The Index is rebalanced and reconstituted quarterly. This Index calculates free cash flow yield by dividing expected free cash flow by enterprise value. Expected free cash flow is the average of trailing 12-month FCF and next 12-month forward free cash flow. Enterprise value (EV) measures a company’s total value, often used as a more comprehensive alternative to equity market capitalization.
Distributed by Foreside Fund Services, LLC (Foreside). Foreside is not affiliated with Victory Capital Management Inc. (VCM), the Fund’s advisor. Neither Foreside nor VCM have affiliation with VettaFi.
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