VOE - VFLO: Reconstitution Update New Factor Mix For This Growing FCF Yield ETF

2024-04-26 16:29:46 ET

Summary

• VFLO is a relatively new FCF Yield ETF with assets under management of $300 million. The first alternative to COWZ, VFLO distinguishes itself by incorporating estimated FCF into the process.
• With quarterly reconstitutions and only 50 stocks selected, investors should expect high turnover and poor diversification. Currently, 92% of the portfolio is allocated to just five sectors.
• The benefits include an attractive set of fundamentals, including a 13.27x forward P/E, double-digit free cash flow margins, and at least temporarily, strong momentum.
• This update compares VFLO's updated fundamentals with COWZ, FLOW, and COWS. It also looks at solving the diversification issue by pairing it with SFLO, VFLO's small-cap cousin.

Investment Thesis

This article continues my quarterly coverage of the VictoryShares Free Cash Flow ETF ( VFLO ), a relatively new fund that has quadrupled its assets under management to $300 million since my last review three months ago. In that analysis , I gave my balanced take on VFLO, noting how its strong factor mix compared to rivals should be balanced against the portfolio's poor diversification at the company and sub-industry levels. ...

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