The (VFLO ) employs a rules-based, indexed methodology that seeks to identify potential profit opportunities for investors regardless of overall market conditions.
VFLO’s Index focuses on free cash flow (FCF), providing an avenue for investors to potentially gain exposure to companies that generate significant cash after accounting for operational expenses and capital expenditures. FCF can be an indicator of a company’s financial health and its ability to fund growth opportunities, dividends, or share buybacks.
See more: How Free Cash Flow Supports Stock Buybacks
VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the Index), which rebalances quarterly. This is a key component of the Index. That allows it to dynamically adjust its holdings in response to changing market conditions and the evolving FCF characteristics of companies within its investment universe. The Index seeks to capitalize on undervalued or attractively priced companies with strong FCF generation. This also potentially reduces exposure to those where FCF generation has weakened or valuations have become less compelling. This dynamic rebalancing approach has led to notable sector allocation shifts based on changing FCF fundamentals, particularly in the energy sector.
As markets have been unpredictable and challenged in recent months, VFLO’s June rebalance positioned investors to potentially benefit from situations where stock price drops were greater than the decline in FCF. This approach has the potential to navigate both upward and downward trending markets.
VFLO Energy Exposure has Increased as FCF Fundamentals Improve
VFLO’s underlying Index has increased its energy exposure in previous rebalances due to improved FCF fundamentals within that sector. This explains the rise in energy representation within the Index’s sector allocations.
The Index currently overweights the energy sector compared to the benchmark Russell 1000 Value Index. Energy makes up 22.27% of VFLO by weight, as of June 30, 2025, compared 5.88% of the Russell 1000 Value Index.
The quarterly rebalancing frequency and index methodology are important to understanding how VFLO’s approach adapts to market dynamics and aims to achieve its investment objectives over time. Whether markets are trending up or down at the time of the next rebalance, VFLO’s distinct Index methodology aims to seek out profitable opportunities.
For more news, information, and analysis, visit the Free Cash Flow Content Hub
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.
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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 ” Read it carefully before investing.
All investing involves risk, including the potential loss of principal. 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 Fund 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 Fund 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). VCS is not affiliated with VettaFi.
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