Core Insights - The article reviews the VictoryShares Small Cap Free Cash Flow ETF (SFLO), highlighting its performance since its inception two years ago on December 21, 2025 [1] Group 1: ETF Overview - SFLO is characterized as a high-quality small-cap value fund, indicating a focus on companies with strong cash flow and growth potential [1] - The fund's performance is compared against other ETFs, suggesting a competitive analysis within the small-cap sector [1] Group 2: Analyst Background - The author, known as The Sunday Investor, has a strong analytical background and has completed advanced investment education, including a Certificate of Advanced Investment Advice [1] - The Sunday Investor has developed a proprietary ETF Rankings system that evaluates nearly 1,000 ETFs based on various factors such as costs, liquidity, risk, and quality [1] Group 3: Engagement and Resources - The Sunday Investor actively engages with readers in the comments section and encourages interaction through the website etf-rankings.com [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 Viewpoint - The U.S. Federal Reserve has cut interest rates by 25 basis points, which may benefit small-cap investors, prompting a recommendation to consider the VictoryShares Small Cap Free Cash Flow ETF (SFLO) for broader exposure beyond the Russell 2000 Index [1]. Group 1: Investment Opportunity - SFLO provides exposure to high free cash flow (FCF) yielding small-cap companies, which can help investors identify true value within the small-cap sector [2]. - The ETF targets companies with attractive growth prospects that can sustain cash flow operations after capital expenditures [5]. - SFLO's methodology focuses on expected FCF, combining trailing and forward-looking cash flow projections, which may enhance investment decisions [5]. Group 2: Sector Exposure - SFLO's rules-based approach may favor sectors that could benefit from further rate cuts, such as energy and consumer discretionary, with significant tilts towards these sectors compared to the Russell 2000 Value Index [6]. - As of September 30, SFLO has a 22.98% allocation to the energy sector and 16.57% to the health care sector, compared to 6.88% and 9.28% in the Russell 2000 Value Index, respectively [6]. Group 3: Index Methodology - The Victory U.S. Small Cap Free Cash Flow Index selects high-quality companies based on profitability screens and strong FCF yield, rebalancing and reconstituting quarterly [10]. - The index calculates FCF yield by dividing expected free cash flow by enterprise value, providing a comprehensive measure of a company's value [10].

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]

Group 1 - The podcast episode features a discussion on the VictoryShares Small Cap Free Cash Flow ETF (SFLO) [1] - The conversation aims to provide investors with a deeper understanding of the ETF [1]

Core Insights - The discussion focused on the VictoryShares Small Cap Free Cash Flow ETF (SFLO) and its investment strategy [1] Group 1: ETF Overview - SFLO targets small-cap companies that generate free cash flow, aiming to provide investors with exposure to this segment of the market [1] - The ETF is designed to capitalize on the potential for growth in small-cap stocks, which may offer higher returns compared to large-cap stocks [1] Group 2: Market Context - The podcast highlighted the current market environment and how small-cap stocks are positioned within it, particularly in relation to economic recovery and inflation [1] - There is an emphasis on the importance of free cash flow as a metric for evaluating the financial health of small-cap companies [1]