VS Small Cap Free Cash Flow ETF (SFLO)
NASDAQ (NMS) NASDAQ (NMS) Primary 
SFLO: Stringent FCF-Centered Strategy With Unconvincing Returns
Victoryshares Small Cap Free Cash Flow ETF is a passively managed ETF with an FCF yield-centered strategy mixing the value and growth factors. At this point, SFLO has a 200 equities-strong portfolio, heavy in energy and industrials, with a massive adjusted weighted average earnings yield of 8.7% and a 13.3% levered FCF margin. Its performance leaves a lot to be desired, in part as it has been hypersensitive to the trade war, mostly owing to its exposure to SMID energy companies.
SFLO Captures Higher Earnings Growth in Small Caps
Advisors and investors looking to increase their exposure to small caps may want to consider the VictoryShares Small Cap Free Cash Flow ETF (SFLO). Small caps remain an asset class investors have been closely watching this year, particularly as concerns around technology stock concentration, valuations, and artificial intelligence (AI) resilience persist.
Small Value Momentum in Different Packages
The ETF flow leader board tends to show many large funds getting even larger. However, when I looked last week, one more moderately sized ETF caught my eye.
SFLO: Top Of Its Class Small Cap Free Cash Flow ETF
Victoryshares Small Cap Free Cash Flow ETF is my top pick for small cap free cash flow ETFs. SFLO's focus on free cash flow yield, growth prospects, and expected future cash flows, wide cap range are some of the reasons it dominates its category. The fund's sector weights differ from the Russell 2000 index, with higher exposure to Energy and Consumer Discretionary, offering deep value and high growth.
Free Cash Flow Growth ETFs Hit Milestones
There is a lot of uncertainty in the markets given changes in fiscal and monetary policy. To start the year, investors have turned to companies with strong financial profiles.
SFLO: High-Quality ETF That Is Underachieving In This Bull Market
SFLO implements a FCF-centered strategy in the small-cap equity universe. The result is a fairly inexpensive SMID mix with large exposure to cyclicals (i.e., energy and industrials), heavy in quality. The main problem though is its soft growth characteristics, which, despite being much stronger than those of CALF, are still unimpressive in today's market.
When Seeking Quality, Don't Miss These Two ETFs
Advisors and investors turn to quality stocks for various reasons across market cycles. Whether hedging for risk, enhancing portfolio diversification or seeking reliable income, quality stocks align with a range of investment strategies.
How SFLO Has Changed to Capture the Current Opportunity Set
The VictoryShares Small Cap Free Cash Flow ETF (SFLO) has seen interesting changes to its top holdings and sector weights. SFLO offers exposure to high-quality small-cap companies trading at a discount with favorable growth prospects and high expected free cash flow (FCF) yields.
SFLO: Free Cash Flow Focus Driving Low Multiples For This Small-Cap ETF
VictoryShares Small Cap Free Cash Flow ETF (SFLO) targets profitable small-cap companies with strong free cash flows, offering attractive valuations compared to the Russell 2000 index. SFLO's methodology excludes financials and REITs, focusing on companies with high free cash flow yields and positive growth outlooks, rebalanced quarterly. SFLO's sector allocation is heavily weighted towards energy and consumer discretionary, with low price/FCF and price/earnings ratios, providing a valuation cushion.
Why It's Important to Evaluate Small Caps by Free Cash Flow
Investors in small caps should not overlook free cash flow (FCF) as a valuable metric for evaluating investment opportunities. FCF is the remaining cash a company has after accounting for operating expenses and capital expenditures.
Oil Tankers in Focus: Under the Hood of SFLO
Oil tankers benefitted from heightened geopolitical turmoil and tension in the first half of the year. The VictoryShares Small Cap Free Cash Flow ETF (SFLO) currently carries several oil tanker companies after the ETF's second-quarter rebalance in June 2024.
Worried About Small-Cap Liquidity? Consider SFLO
Investors looking ahead to eventual interest rate cuts or simply wanting to diversify their large-cap equity portfolios may want to consider small caps in the second half of the year.
