Core Insights - The article emphasizes the importance of free cash flow (FCF) as a metric for evaluating equities, particularly in a market characterized by high capital spending and concentration among a few dominant companies [1][2]. Group 1: Free Cash Flow as a Metric - Free cash flow provides insight into the cash available after meeting operating and capital needs, highlighting financial flexibility that traditional earnings metrics may miss [2][4]. - Companies with excess FCF can reinvest in operations, reduce debt, pay dividends, or pursue other activities to enhance shareholder value [4]. Group 2: Market Risks and Opportunities - The current market presents opportunities but also significant uncertainties, particularly due to overconcentration in the "Magnificent Seven" stocks (Amazon, Alphabet, Apple, Meta, Microsoft, Nvidia, and Tesla) [3]. - Heavy capital expenditures by these companies have created a disparity between reported earnings and FCF, as CapEx is capitalized and depreciated over time, potentially overstating earnings during heavy investment periods [3][4]. Group 3: Investment Strategies - Investors are encouraged to consider FCF-centered strategies to better assess a company's underlying value, as traditional earnings may not accurately reflect cash-generating capacity [4]. - ETFs like the VictoryShares Free Cash Flow ETF (VFLO) and VictoryShares Free Cash Flow Growth ETF (GFLW) focus on companies with strong FCF and growth prospects, potentially offering diversification beyond traditional value allocations [5][6]. Group 4: International Equity Trends - A significant portion of investors (over 50%) indicated a preference for international equities, driven by a declining dollar and concerns over U.S. market valuations [7]. - VictoryShares offers international FCF ETFs, such as the VictoryShares International Free Cash Flow ETF (IFLO) and VictoryShares International Free Cash Flow Growth ETF (GRIN), targeting companies with high FCF yields and growth potential [8][9]. Group 5: Historical Performance Insights - Over the past decade, the Russell 1000 Value Index has underperformed compared to the Russell 1000 Growth Index in the U.S., while the opposite trend has been observed internationally, suggesting potential mean reversion opportunities in international growth [10].

Core Insights - The article discusses the significance of free cash flow (FCF) as a flexible metric for international equity investing, especially in the context of global de-dollarization and a weakening dollar [2][4]. Group 1: International Investing Trends - There is a growing interest in international investing as U.S. equities, particularly those focused on artificial intelligence, may have reached peak valuations [2]. - Investors are increasingly looking for value-oriented opportunities outside U.S. borders, making FCF a critical metric for assessing companies' cash deployment capabilities [2]. Group 2: FCF-Driven Investment Strategies - Investors can utilize cash flow statements of international equities to identify opportunities, or they can invest through ETFs like VictoryShares International Free Cash Flow ETF (IFLO) and VictoryShares International Free Cash Flow Growth ETF (GRIN) for diversified exposure [3][4]. - IFLO targets the largest profitable companies with the highest FCF, combining trailing and forward-looking metrics to provide a clearer picture of future cash generation [4]. - GRIN focuses on companies with strong future growth prospects, analyzing their ability to sustain FCF gains over time [5]. Group 3: Portfolio Diversification - Both IFLO and GRIN can be used independently or together to provide comprehensive exposure to international equities, regardless of whether value or growth is currently favored in the market [6]. - A combined portfolio of IFLO and GRIN offers diversification across value and growth factors while leveraging the all-weather FCF metric, beneficial in various market conditions [7].

Core Insights - A weakening U.S. dollar is prompting a shift towards international equities as investors seek better opportunities abroad [1] - Valuations in domestic markets are perceived as stretched, further encouraging this transition to international investments [1] Group 1 - The VictoryShares International Free Cash Flow Growth ETF (GRIN) is highlighted as a potential beneficiary of this trend towards international equities [1]

Core Insights - The S&P 500 Index is reaching new highs, prompting advisors to seek ways to maintain equity exposure while managing valuation risks. Free cash flow (FCF) is highlighted as a crucial metric for identifying high-quality investment opportunities in the current market environment [1][2]. Group 1: Importance of Free Cash Flow - Free cash flow is emphasized as a tool to navigate elevated valuations and concentration in mega-cap growth stocks, particularly in the context of rising AI-related capital expenditures [2][5]. - Companies with strong and sustainable cash generation are positioned for long-term growth, enhancing portfolio resiliency [2]. - Historical trends show a cyclical dominance of growth and value, with current allocations being 23% towards growth and 15% towards value [3]. Group 2: FCF Mechanics and Evaluation - The evaluation of FCF involves analyzing cash flow relative to enterprise value, aiming to identify companies with attractive valuations based on profitability [8][16]. - Key metrics include FCF yield and return on invested capital (ROIC), which provide a comprehensive measure of profitability [8]. Group 3: FCF ETF Strategies - Victory Capital offers several ETFs focused on FCF, including: - VictoryShares Free Cash Flow Growth ETF (GFLW), which targets U.S. companies with high FCF profitability [9]. - VictoryShares Free Cash Flow ETF (VFLO), focusing on large-cap U.S. stocks with favorable growth prospects [9]. - VictoryShares Small Cap Free Cash Flow ETF (SFLO), investing in profitable small-cap companies with high FCF yields [9]. - International options include VictoryShares International Free Cash Flow ETF (IFLO) and VictoryShares International Free Cash Flow Growth ETF (GRIN) [10]. Group 4: FCF Strategy in Market Conditions - A FCF strategy is deemed beneficial during economic slowdowns, as companies with substantial cash reserves can better withstand downturns compared to those heavily invested [11]. - The flexibility of FCF ETFs makes them suitable for various market environments, supporting the diversification of portfolios [11][12].

Core Insights - The S&P 500 Index is reaching new highs, prompting advisors to seek ways to maintain equity exposure while managing valuation risks. Free cash flow (FCF) is highlighted as a crucial tool for identifying high-quality investment opportunities in the current market [1][2]. Group 1: Importance of Free Cash Flow - Free cash flow is essential for cutting through market noise characterized by high valuations and concentration in mega-cap stocks, particularly in the context of rising AI-related capital expenditures [2][5]. - Companies with strong and sustainable cash generation are positioned for long-term growth, enhancing portfolio resiliency [2]. - Historical trends show that growth and value investing come in cycles, with current allocations being 23% towards growth and 15% towards value [3]. Group 2: FCF Mechanics and Evaluation - The evaluation of FCF involves analyzing a company's cash flow relative to its enterprise value, aiming to identify companies with attractive valuations based on profitability [8][16]. - Key metrics include FCF yield and return on invested capital (ROIC), which provide a comprehensive measure of profitability [8]. Group 3: FCF ETF Strategies - Victory Capital offers several ETFs focused on FCF, including: - VictoryShares Free Cash Flow Growth ETF (GFLW), which targets U.S. companies with high FCF profitability [9]. - VictoryShares Free Cash Flow ETF (VFLO), focusing on large-cap U.S. stocks with favorable growth prospects [9]. - VictoryShares Small Cap Free Cash Flow ETF (SFLO), investing in profitable small-cap companies with high FCF yields [9]. - International options include VictoryShares International Free Cash Flow ETF (IFLO) and VictoryShares International Free Cash Flow Growth ETF (GRIN) [10]. Group 4: FCF Flexibility and Market Resilience - A FCF strategy is beneficial during economic slowdowns, as companies with substantial cash reserves can better withstand market downturns [11]. - The emphasis on diversifying portfolios with a focus on free cash flow is recommended for navigating various market conditions [12].

Core Insights - The S&P 500 has reached multiple record highs, leading to investor concerns about whether valuations have peaked and if it is the right time to invest new capital [1] - Victory Capital emphasizes the importance of free cash flow (FCF) as a metric to identify high-quality businesses in elevated-valuation markets [1][2] Free Cash Flow ETFs - Victory Capital has launched a suite of ETFs focused on FCF, including the flagship VictoryShares Free Cash Flow ETF (VFLO), which tracks the Victory U.S. Large Cap Free Cash Flow Index [2] - The VFLO Index targets high-quality, large-cap companies with attractive valuations and solid growth prospects [2][12] Valuation Risks - Current market conditions present valuation risks, with stock prices showing a disconnect from fundamental metrics [3] - Investors are encouraged to mitigate valuation risks by investing in stocks with high free cash flow [3] Growth Factor and FCF - Research indicates that combining growth with FCF can enhance investment effectiveness [4] - The VictoryShares Free Cash Flow Growth ETF (GFLW) provides exposure to U.S. companies with high FCF profitability and growth potential [3][4] International Opportunities - With the dollar's weakness and other macroeconomic factors, investors are increasingly looking at international equities [5] - Victory Capital has introduced the VictoryShares International Free Cash Flow ETF (IFLO) and the VictoryShares International Free Cash Flow Growth ETF (GRIN) to expand access to high-quality, high FCF companies globally [5][6] Diversification Strategy - The suite of FCF ETFs allows investors to build a diversified portfolio, including small-cap exposure through the VictoryShares Small Cap Free Cash Flow ETF (SFLO) [6] - Research supports the appeal of FCF across various regions and asset classes, promoting a diversified investment approach based on FCF [7]

Core Insights - Investors may overlook growth-oriented, profitable companies generating free cash flow (FCF) due to home country bias, but can benefit from international exposure through the VictoryShares International Free Cash Flow Growth ETF (GRIN) [1] Group 1: ETF Overview - GRIN tracks the Victory International Free Cash Flow Growth Index, targeting high-growth, international large-cap companies with potential for compounding FCF generation over time [2] - The Index uses FCF as a forward-looking measure, filtering companies based on FCF trends, FCF to return on invested capital, and growth prospects [2] Group 2: Importance of FCF - FCF is a key metric for assessing sustainable growth companies, indicating their ability to reinvest, offer dividends, or buy back stock, all contributing to shareholder value [3] - GRIN's indexed approach focuses on international companies exhibiting these characteristics, helping diversify portfolios concentrated in U.S. equities [3] Group 3: Notable Holdings - Rolls-Royce Holdings, a British aerospace and defense company, is a top holding in GRIN with a 3.88% allocation, potentially benefiting from increased military spending in the EU [4] - Siemens Energy, a German company, is experiencing record orders due to power demands from AI applications, crucial for Europe's power grid [5] - Siemens is also a leading wind power company, contrasting with the U.S. political agenda, highlighting missed opportunities for investors with a home country bias [6] - Sea Limited, based in Singapore, has seen a nearly 70% increase in value for the year as of 8/31/2025, capitalizing on e-commerce strength in Southeast Asia [7] Group 4: Diversification Strategies - For global diversification, investors can pair GRIN with other VictoryShares ETFs, such as the value-oriented VictoryShares Free Cash Flow ETF (VFLO), which focuses on high-quality, large-cap U.S. stocks [8] - The VictoryShares Free Cash Flow Growth ETF (GFLW) provides exposure to U.S. companies with high FCF profitability and growth potential [9]