In a current market environment where investors have tunnel vision for large-cap names like those in the Magnificent Seven, the VictoryShares Small Cap Free Cash Flow ETF (SFLO ) reminds investors that value-focused small-cap opportunities exist and should be on their proverbial radars. One of those is Symbotic Inc., (SYM), a holding in SFLO as of 12/11/25.
Symbotic is a leader in AI-enabled robotics technology for the consumer goods supply chain, and may be poised for a strong growth trajectory. Investors in a fund tracking a broad small-cap index like the Russell 2000 may not have exposure to this name. SFLO, however, tracks an index that uses a more focused screening process.
The ETF seeks to track the Victory U.S. Small Cap Free Cash Flow Index (the Index) which screens for companies exhibiting strong free cash flow (FCF). FCF is the remaining funds after taking operating cash flow and deducting capital expenditures (Capex).
SFLO provides exposure to small-cap companies with strong FCF yields. FCF is a useful gauge of a company’s overall financial health. Companies generating excess FCF can reinvest in growth, pay dividends, and create shareholder value. They can also use it to reduce long-term debt—an important advantage for many small-cap firms that often carry heavier leverage.
A Forward-Looking Approach
A prime advantage of SFLO’s index methodology is that it doesn’t rely on trailing cash flows during its screening process. Instead, the Index uses forward-looking FCF (a projection of a company’s expected flows) when looking at a company like Symbotic.
Because of its forward-looking focus, the Index targets companies with high FCF yield and attractive growth potential. Symbotic checks those boxes. As of the Index’s most recent rebalance screening process on 9/11/2025, Symbotic screened back into the Index due it’s high expected FCF yield1 (13.64%). The Russell 2000 Value Index for comparison has an expected FCF yield of only 3.56%. Additionally, the growth rate2 of Symbotic compared to the benchmark Russell 2000 Value Index is 37.32% vs 5.62%, respectively.
Companies that are focused on innovation and disruptive technology like Symbotic are paramount in identifying current opportunities in small-caps. With a 0.80% allocation (as of 12/11/25), Symbotic is just one of the many nascent opportunities of which the Index seeks to identify.
1/ Expected FCF yield is measured by the average of trailing 12-month FCF and next 12-month forward FCF over enterprise value. Enterprise value reflects a company’s market capitalization, adjusted for debt and cash, providing a more complete picture of its total value.
2/ Growth rate is measured by sales trend and EBITDA trend, Sales trend is calculated by the slope of two forward years of sales and five years of trailing sales divided by the average of those years. EBITDA trend is calculated by the slope of two
forward years of EBITDA and five years of trailing EBITDA divided by the average of those years.
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VettaFi LLC (“VettaFi”) is the index provider for SFLO, for which it receives an index licensing fee. However, SFLO is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SFLO.
Holdings are subject to change and should not be construed as investment advice or a recommendation to buy, sell, or hold any security.
Disclosure Information
Carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. To obtain a prospectus or summary prospectus containing this and other important information, visit http://www.vcm.com/prospectus. Read it carefully before investing.
All investing involves risk, including the potential loss of principal. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, or changes in interest or currency rates. The Fund has the same risks as the underlying securities traded on the exchange throughout the day. ETFs may trade at a premium or discount to their net asset value. Investing in companies with high free cash flows could lead to underperformance when such investments are unpopular or during periods of industry disruptions. The fund could also be affected by company-specific factors that could jeopardize the generation of free cash flow. Investments in smaller companies typically exhibit higher volatility. Index Funds invest in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Fund may diverge from that of the Index. *Large shareholders*, including other funds advised by the Adviser, may own a substantial amount of the Fund’s shares. The actions of large shareholders, including large inflows or outflows of cash, may adversely affect other shareholders, including potentially increasing capital gains. Investments concentrated in an industry or group of industries may face more risks and exhibit higher volatility than investments that are more broadly diversified over industries or sectors. Companies in the *consumer discretionary* sector are subject to changes in the overall international economy; interest rates; competition; consumer confidence; and individual disposable income and spending. The is also subject to the risks of product obsolescence, resource depletion and labor relations. Investments in companies in the energy sector may be subject to substantial government regulation, as well as risks involving changes in energy prices, international political instability, and liability for environmental damage and accidents resulting in loss of life or property. Derivatives may not work as intended and may result in losses. The value of your investment is also subject to geopolitical risks such as wars, terrorism, trade disputes, environmental disasters, and public health crises; the risk of technology malfunctions or disruptions; and the responses to such events by governments and/or individual companies.
The Victory U.S. Small Cap Free Cash Flow Index aims to select high quality companies from its starting universe by applying profitability screens. It then selects companies with the strongest free cash flow yield that exhibit higher growth. The Index is rebalanced and reconstituted quarterly. This Index calculates free cash flow yield by dividing expected free cash flow by enterprise value. Expected free cash flow is the average of trailing 12-month FCF and next 12-month forward free cash flow. Enterprise value (EV) measures a company’s total value, often used as a more comprehensive alternative to equity market capitalization.
You cannot invest directly in an index.
Free cash flow yield is a financial solvency ratio that compares the free cash flow per share a company is expected to earn against its market value per share.
VictoryShares ETFs are distributed by Victory Capital Services, Inc. (VCS). VCS is not affiliated with VettaFi.
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