Large cap growth companies propelled much of the market gains for 2025. As investors note signs of frothy and elevated valuations, some may be reassessing whether value-oriented exposures could play a more meaningful role in portfolios. Alternatively, growth can continue its upward trajectory. Investors don’t have to choose between the two as they can construct a portfolio that balances these style exposures using two free cash flow (FCF) ETFs: the VictoryShares Free Cash Flow Growth ETF (GFLW) and VictoryShares Free Cash Flow ETF (VFLO). These two ETFs offer a two-punch combination that could capture upside regardless of whether growth or value is the dominant factor in the current market environment.
As their fund names both explicitly mention, the common denominator of both VFLO and GFLW is the use of FCF—a crucial component when evaluating equities. This was a topic of discussion when Michael Mack, a VictoryShares and Solutions Client Portfolio Manager, joined TMX VettaFi Head of Sector & Industry Research Roxanna Islam in a 4th quarter 2025 webinar: AI, Valuations, and Concentration Risks: Why Free Cash Flow Matters More Than Ever. One of the topics discussed was the ebb and flow of growth over value. The chart below shows the dominance of growth over value over the last 15 years, as reflected in the disparity between the P/E ratios of the Russell 1000 Growth Index and the Russell 1000 Value Index.
“What’s interesting about this chart, that we haven’t heard about, is that when growth started this run in 2010, it was doing so from a cheap valuation,” Mack observed. “Notice that the growth index in 2009 was trading at the same valuation as the value index. Normally, growth would trade at a healthy premium to reflect higher growth prospects.”
“But at this time, you could see a disconnect where you could buy a growth company at the same price as a value company,” Mack added, noting that these were healthy valuations for growth relative to value at the time.
However, he continued, things have changed over the last five years, with valuations shifting toward growth over value. The gap between growth and value is widening, and that disparity could present more risk.
“There’s the risk that if the spread contracts, we may see an extended period of growth underperformance,” Mack concluded.
Pairing GFLW With VFLO
Rather than cycling between the two investment styles, GFLW and VFLO’s respective indexes are designed to capture the potential upside of both. As mentioned, this is the inherent advantage in using FCF to guide an investment approach. It has the potential to be a viable metric, irrespective if growth or value is outperforming the other.
GFLW tracks the Victory Free Cash Flow Growth Index (the GFLW Index). This growth-oriented rules-based process tilts toward large-cap companies with the potential to compound FCF over time. It examines both trailing 12-month FCF and future FCF to answer the question: Can the company continue increasing its FCF in the future? With the GFLW Index’s process centered on FCF over return on invested capital, the ETF can offer large cap growth exposure that complements traditional growth benchmarks.
On the value end of the spectrum, VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the VFLO Index). Like the GFLW Index, the VFLO Index assesses a company’s expected FCF rather than solely relying on trailing cash flow data. Companies with increased FCF may have more capital on hand to allocate towards activities that can increase shareholder value, such as reinvesting in its own operations, buying back shares, or offering dividends to its investors. The VFLO Index is centered on screening for companies with the highest FCF yields.
Both GFLW and VFLO Indexes screen out companies with the slowest growth prospects to help limit the potential to screen in value traps or companies that may have muted growth potential.
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VettaFi LLC (“VettaFi”) is the index provider for VFLO and GFLW, for which it receives an index licensing fee. However, VFLO and GFLW 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 GFLW.
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. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, or changes in interest or currency rates. The Funds have the same risks as the underlying securities traded on the exchange throughout the day. ETFs may trade at a premium or discount to their net asset value. GFLW is a Fund is new with a limited operating history. As a result, it does not have a record of performance or other dealings for prospective investors to evaluate when making investment decisions. Investing in companies with high free cash flows could lead to underperformance when such investments are unpopular or during periods of industry disruptions. The funds could also be affected by company-specific factors that could jeopardize the generation of free cash flow. Index Funds invest in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Funds may diverge from that of their respective Indexes. Large shareholders, including other funds advised by the Adviser, may own a substantial amount of the Funds shares. The actions of large shareholders, including large inflows or outflows of cash, may adversely affect other shareholders, including potentially increasing capital gains. 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. Investments in companies in the energy sector may be subject to substantial government regulation, as well as risks involving changes in energy prices, international political instability, and liability for environmental damage and accidents resulting in loss of life or property. The profitability of companies in the healthcare sector may be affected by government regulations and healthcare programs, fluctuations in the cost of, and demand for, medical products and services and product liability claims. Investments in companies in the industrials sector, including producers of durable goods and companies that process raw materials, may be adversely affected by changes in supply and demand for products and services, governmental regulation and changes in spending policies, world events and economic conditions. Derivatives may not work as intended and may result in losses. The Funds may frequently change their holdings, resulting in higher fees, lower returns, and more capital gains. value of your investment is also subject to geopolitical risks such as wars, terrorism, trade disputes, 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 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.
The Victory Free Cash Flow Growth Index focuses on high quality profitable companies that display a positive free cash flow trend. It selects larger cap companies with the highest free cash flow relative to invested capital that also exhibit higher growth.
You cannot invest directly in an index.
VictoryShares ETFs distributed by Victory Capital Services, Inc. (VCS). VCS is not affiliated with VettaFi.
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