A proliferation of ETF strategies in recent years means investors now find themselves with many choices when looking to enhance their equity returns. VictoryShares has launched an ETF that allows investors to capture value-oriented companies with growth potential.
Potential economic slowing remains a top concern for many investors heading into the second half of 2024. Free cash flow (FCF) strategies offer one potential screen for those investors seeking reliable companies.
VFLO, which only made its debut in the markets in June 2023, has done reasonably well, generating 28% returns and largely outperforming the broader markets except in recent months. We highlight why VFLO is a better pick than COWZ, which tends to dominate fund flows in the FCF ETF space. VFLO is a good buy now due to its tilt towards defensive sectors like healthcare, oversold large and midcap value stocks, cheap valuations, and the formation of positive price action.
In an investing environment rife with risk, one of the top investment trends of the last year centers around increased cash on the sidelines. However, there may be value in putting some of that cash to work in free cash flow (FCF) strategies this year.
VFLO's quarterly reconstitution took effect Monday, substituting 13/50 holdings mostly in favor of Health Care and at the expense of Technology. Despite this shakeup, VFLO's quality and value features remain solid. VFLO's estimated sales and earnings growth rates also improved due to its Index's secondary growth screen. Investors should consider VFLO's extreme concentration, as it's only a 50-stock fund, with 70% allocated to three sectors. One of those has poor long-term risk-adjusted returns.
The debate regarding a hard or soft economic landing continues into the summer months. Investors looking for the benefits of value stocks while still leaning towards growth may want to consider opportunities in the VictoryShares Free Cash Flow ETF (VFLO).
VFLO invests in U.S. equities with above-average free cash flow yields and growth. VFLO has a higher free cash flow yield than the S&P 500 and Russell 1000 value index. The fund has significantly outperformed equity indexes and peers since inception, although that was a short while ago.
Advisors and investors concerned about equity valuations and stability in high-rate environments may be looking to free cash flow companies for opportunity. Growth is an important factor to also assess when considering high free cash flow-yielding companies, but faster growth isn't always better when viewed in isolation.