VictoryShares Small Cap Free Cash Flow ETF

SFLO

Market cap $343M

SFLO is a smart-beta ETF that introduces a methodology to eliminate junk equity and value traps. It does this with a quarterly screening of 2,500 small caps, narrowing them down to 200 through a hybrid value + growth philosophy. The result strongly reminds me of the GARP investment style, which I personally appreciate a lot, applied to both small and large caps.

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research, Todd Rosenbluth, discusses the VictoryShares Small Cap Free Cash Flow ETF (SFLO) with Chuck Jaffe of Money Life. The pair discusses several topics related to the fund to give investors a deeper understanding of the ETF.

VettaFi's Head of Research Todd Rosenbluth discussed the VictoryShares Small Cap Free Cash Flow ETF (SFLO) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and analysis visit VettaFi | ETFDB.

People might be shocked to learn the Mag 7 are not in a bubble. The PEGY ratio of 0.9 to 1.0 confirms Morningstar's fair value estimate. However, you might be even more shocked to discover that value is having an incredible rally this year, with stocks like Realty Income beating the Mag 7. Accelerating EPS growth, combined with falling interest rates (which enhance the profitability of value stocks) and AI-fueled margin expansion, could cause this value rally to persist for years.

As the Federal Reserve's rate cuts become more likely to begin in September, investors may shift their focus back to U.S. small-cap ETFs. Many of these funds have been out of favor in 2025, as large-cap counterparts have captured significant investor attention.

The VictoryShares Small Cap Free Cash Flow ETF (SFLO) was met with intriguing changes to its portfolio composition following a recent rebalance. SFLO tracks the Victory U.S. Small Cap Free Cash Flow Index (the Index), which captures high-quality small-cap companies.

Investors seeking equity diversification would do well to consider the VictoryShares Small Cap Free Cash Flow ETF (SFLO). The approach focuses on free cash flow (FCF) yield and creates a differentiated portfolio from value benchmarks.

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.

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.

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.