Global X ETFs continue to launch new products into the exchange traded fund space. On Wednesday, the firm launched the Global X U.S. Cash Flow Kings 100 ETF (NYSE Arca: FLOW). The latest income fund from Global X provides access to companies which exhibit high free cash flow yields.
FLOW holds companies that generate a high level of free cash flow. These companies may be better positioned to invest in new projects, increase dividend payouts, or pay down debt.
FLOW seeks to track the performance, before fees and expenses, of the Global X U.S. Cash Flow Kings 100 Index. The index selects the top 100 constituents within the Mirae Asset U.S. 1000 Index exhibiting the best free cash flow yield over the last 12 months. The Mirae Asset U.S. 1000 Index tracks the performance of the top 1,000 U.S. companies by market capitalization.
Appealing in a High Rate Environment
According to Global X, the stickier parts of inflation, such as housing and wages, may keep interest rates high for a while. In a high interest rate environment, companies with high levels of free cash flow may be appealing. Free cash flow may offer a level of insight into a company’s financial health and corporate flexibility.
FLOW targets companies “that have exhibited the highest free cash flow yield,” said Global X’s director of research Rohan Reddy. This makes “them likely well-positioned to meet financial obligations, expand, and/or return money to their shareholders.”
“During this period of elevated interest rates, companies with such robust profitability may be a particularly appealing addition to the core components of investors’ equity portfolios,” Reddy added.
FLOW carries a total expense ratio of 0.25%.
The launch of FLOW is part of Global X expanding its lineup of ETFs in recent months. Last month, Global X launched the Global X 1-3 Month T-Bill ETF (CLIP), a short-term Treasuries fund. In May, the firm listed the Global X Carbon Credits Strategy ETF (NTRL). It also completed the conversion of two mutual funds into two actively managed emerging markets ETFs: the Global X Emerging Markets Great Consumer ETF (EMC) and the Global X Emerging Markets ETF (EMM).
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