The VictoryShares Free Cash Flow ETF (VFLO ) saw strong demand over the course of 2024 and remains well-positioned in 2025.
VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the Index), which targets companies that generate strong free cash flow (FCF) by first applying a profitability screen to a universe of U.S. large-cap stocks. The Index then selects companies with the highest FCF yields exhibiting higher growth potential.
The outlook for VFLO is constructive as it serves as a portfolio diversifier, offers access to companies at attractive valuations, and has historically generated attractive returns for investors.
See more: This FCF ETF Can Work With QQQ to Diversify Returns
1. Victory’s FCF ETF VFLO Serves as a Diversifier
Diversification is always key, but it’s even more important in 2025 as U.S. equity indexes become increasingly concentrated, raising the need to broaden portfolio exposures.
Notably, VFLO has no exposure to the Magnificent Seven stocks, making it an ideal complement to other broad benchmarks. The Magnificent Seven refers to a group of influential stocks in the technology sector: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla.
Furthermore, VFLO is diversified across sectors. This means that it can fit in portfolios as a core equity holding.
2. Companies Trading at a Discount Continues
As mentioned above, U.S. equity valuations are nearing historic highs. An FCF ETF like VFLO may add value to investor portfolios. From a valuation perspective, VFLO is trading at a much more attractive multiple than broad benchmarks like the S&P 500.
Historically, investors have looked at companies with high FCF yields when they get nervous about high valuations. “If advisors are worried about the companies with high valuations, they may opt to gravitate towards the companies with low valuations,” VictoryShares and Solutions Associate Portfolio Manager Michael Mack told VettaFi.
3. VFLO Generated Strong Returns in 2024
While past performance has no guarantee of future results, VFLO demonstrated its ability to keep up with the market in a growth-oriented environment despite not owning any of the Magnificent Seven stocks.
Through the end of 2024, VFLO generated a positive return just shy of 22%. The ETF can be an important tool for improving value exposure while complementing growth exposure.
For more news, information, and analysis, visit the Free Cash Flow Channel
VettaFi LLC (“VettaFi”) is the index provider for VFLO, for which it receives an index licensing fee. However, VFLO is not issued, sponsored, endorsed, or sold by VettaFi. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of VFLO.
Standardized ETF Performance (%) as of 12/31/2024
Disclosure Information
Past performance does not guarantee future results. The performance data quoted represents past performance and current performance may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost.
To obtain performance information current to the most recent month-end, visit www.victoryshares.com. ETF shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market price returns are based on price of the last reported trade on the fund’s primary exchange. If you trade your shares at another time, your return may differ. Returns include reinvestment of dividends and capital gains. Performance for periods greater than one year is annualized. Fee waivers and/or expense reimbursements were in place for some or all periods shown, without which, fund performance would have been lower. Net expense ratios reflect the contractual waiver and/or reimbursement of management fees through October 31, 2025.
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 the Fund is a new ETF with a limited history. The Fund has 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.
The ETF invests in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Fund may diverge from that of the Index.
Investing in companies with high free cash flows could lead to underperformance when such investments are unpopular or during periods of industry disruptions The ETF 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 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.
VictoryShares ETFs distributed by Victory Capital Services, Inc. (VCS), an affiliate of Victory Capital Management Inc. (VCM). Neither VCS nor VCM are affiliated with VettaFi.
20250303-4283228
