Victory Capital has reached a significant milestone with one of its newest free cash flow (FCF) ETFs.
The VictoryShares Free Cash Flow ETF (VFLO ) crossed $1 billion in assets under management less than a year and a half after launch. VFLO holds companies that generate strong FCF, which can indicate quality and operating efficiency.
VFLO saw strong flows during the third quarter, attracting nearly $500 million in net flows, according to data from VettaFi Pro. The ETF reached the $500 million AUM threshold this past July, effectively doubling in size in just around 90 days.
See more: VFLO Reaches Double Milestone
FCF is the remaining cash a company has after covering its expenses. It can be used to invest in growing the business, pay dividends, or pay down debt. This makes FCF useful in measuring a company’s health.
VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the Index) and the ETF’s benchmark is the Russell 1000 Value Index. The Index is unique in that it provides a holistic way of assessing FCF. This includes considering trailing and anticipated FCF based on analyst estimates. Additionally, the rules-based Index accounts for overall FCF and FCF yield when weighing companies within the portfolio.
As of October 4, 2024, the top names in VFLO included Expedia Group (EXPE), Cigna Group (CI), Qualcomm (QCOM), Vistra Corporation (VST), and Merck & Co (MRK).
Investors Show Interest in FCF ETF Strategies
Many investors are looking to focus on high-quality companies and portfolio diversification in the current environment, according to VettaFi Investment Strategist Cinthia Murphy, which is something that FCF ETFs can offer.
Particularly now, as U.S. equity valuations are near historic highs, an FCF ETF like VFLO may add value to investor portfolios.
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.
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.
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. 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 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. 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
If a seed investor redeems its shares, it could negatively impact the Funds’ NAV, market price and brokerage costs. The ETF has 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 ETF invests in securities included in, or representative of securities included in, the Index, regardless of their investment merits.
Large shareholders, including other funds advised by the Adviser, may own a substantial amount of the Fund’s shares. The actions of large shareholders, including large inflows or outflows, may adversely affect other shareholders, including potentially increasing capital gains. 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 Russell 1000® Value Index is a market-capitalization-weighted index that measures the performance of Russell1000® Index companies with lower price-to-book ratios and lower forecasted growth rates.
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). VCS is not affiliated with VettaFi.
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