VictoryShares Free Cash Flow Growth ETF

GFLW

Market cap $616M

The fourth quarter is typically – seasonally – positive for U.S. equities. An ongoing government shutdown is not a strong backdrop for markets, but major indices remain close to record highs, waiting for new data for direction.

The VictoryShares Free Cash Flow Growth ETF is a passively managed ETF focused on FCF-rich companies with convincing FCF growth prospects. I upgraded it to a Buy in June, and I maintain this rating today. GFLW has outperformed the market since December 2024. Since the beginning of the year, it has beaten most of its peers in the Large Growth subclass.

When seeking growth investments, advisors and investors find themselves with an ever-expanding array of strategies to choose from. However, for those with an eye for capturing sustainable growth, ETFs like the VictoryShares Free Cash Flow Growth ETF (GFLW) that focus on return on invested capital are worth consideration.

The VictoryShares Free Cash Flow Growth ETF (GFLW) recently celebrated its six-month trading milestone after launching on December 3, 2024, making this a great opportunity to review the ETF's distinct exposure as well as the performance it has delivered.

Advisors and investors poured an impressive $115 billion of new money into ETFs in July. That further proves the industry's relentless pace, even during summer months.

Momentum weighting can be one facet of a strategic approach to growth investing, helping navigate the challenging decision of when to sell.  A methodology that includes momentum weighting aims to address two key pitfalls common in growth investing.

On this week's episode of ETF Prime, Kirsten Chang, senior industry analyst at VettaFi, joins host Nate Geraci to highlight key takeaways from VettaFi's Midyear Market Outlook Symposium. Later, Lance Humphrey from Victory Capital discusses the VictoryShares ETF lineup and offers insights into the current market environment.

Uncertainty remains high and concerns about economic strength remain very real. But calls for a look at quality growth are getting louder as we approach the second half of the year.

GFLW is a passively managed vehicle leveraging an FCF-focused strategy at the intersection of growth and quality. In January, I assigned a Hold rating to GFLW as it had just a few weeks in the books, plus its performance was not encouraging. However, I upgrade it to Buy owing to its outperformance, impressive AUM growth, and quality-heavy factor mix that has advantages over those of IVV and IWF.

Every year, a large number of ETFs launch in December, aiming to get the benefit of a fresh calendar year of performance. Six months later, some of them have done so and garnered investor interest.