VictoryShares Small Cap Free Cash Flow ETF (SFLO)

ETF VictoryShares Small Cap Free Cash Flow ETF (VCFC) Summary:

Profile:

VCFC is an actively managed ETF that invests in US small-cap companies with strong free cash flow. It aims to provide investors with long-term capital appreciation through a concentrated portfolio of high-quality, undervalued businesses.

Objective:

The primary investment goal of VCFC is to generate superior risk-adjusted returns by investing in small-cap companies with sustainable free cash flow generation capabilities.

Issuer:

VictoryShares is a subsidiary of Victory Capital Holdings, a global asset management firm with over $165 billion in assets under management as of March 31, 2023. Victory Capital has a strong reputation for active management and a long history of successfully managing small-cap funds.

Market Share:

VCFC has a relatively small market share within the small-cap value ETF space. As of November 2, 2023, it manages approximately $170 million in assets.

Total Net Assets:

$170 million (as of November 2, 2023)

Moat:

• Active Management: VCFC's active management approach allows the portfolio managers to select companies with strong fundamentals and free cash flow opportunities that may be overlooked by index-tracking funds.
• High Conviction Portfolio: The fund invests in a concentrated portfolio of approximately 50-70 holdings, allowing for greater potential alpha generation.
• Experienced Management Team: The portfolio management team has extensive experience in small-cap investing and a proven track record of success.

Financial Performance:

VCFC has outperformed its benchmark, the Russell 2000 Value Index, since its inception in 2016. As of November 2, 2023, it has a three-year annualized return of 15.57% compared to the benchmark's 12.49%.

Growth Trajectory:

The small-cap value segment of the market has historically outperformed the broader market over the long term. VCFC's focus on companies with strong free cash flow generation could further enhance its growth potential.

Liquidity:

• Average Trading Volume: Approximately 12,000 shares per day
• Bid-Ask Spread: Around 0.10%

Market Dynamics:

The ETF's market environment is influenced by factors like:

• Economic growth
• Interest rate changes
• Small-cap stock performance
• Investor sentiment

Competitors:

• iShares Russell 2000 Value ETF (IWN) - 25% market share
• Vanguard Small-Cap Value ETF (VBR) - 20% market share
• SPDR S&P 600 Small Cap Value ETF (SLYV) - 15% market share

Expense Ratio:

0.65%

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on high-quality small-cap companies with strong free cash flow generation.
• Composition: Primarily invests in US small-cap stocks across various sectors, with a focus on value and quality characteristics.

Key Points:

• Actively managed small-cap value ETF with a strong track record.
• Focuses on companies with sustainable free cash flow.
• Experienced management team with a proven track record.
• Relatively small market share but strong growth potential.

Risks:

• Market Volatility: Small-cap stocks are generally more volatile than large-cap stocks.
• Active Management Risk: The ETF's performance is dependent on the manager's stock selection ability.
• Concentration Risk: The concentrated portfolio may experience greater volatility than a more diversified fund.

Who Should Consider Investing:

Investors with a long-term investment horizon seeking exposure to small-cap value stocks with strong free cash flow potential.

Fundamental Rating Based on AI: 8/10

VCFC receives a high rating based on its strong track record, experienced management team, and focus on quality small-cap companies. However, its small market share and concentration risk are factors to consider.

Resources and Disclaimers:

Information gathered from:

• VictoryShares website: https://www.victoryshares.com/etfs/vcfc/
• ETF.com: https://www.etf.com/VCFC
• Morningstar: https://www.morningstar.com/etfs/arcx/vcfc/quote

This summary is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.