Micron Technology, Inc. (MU) entered the VictoryShares Free Cash Flow ETF (VFLO B+) at its September 2026 rebalance and, with Sandisk Corporation (SNDK), became one of the fund’s two largest holdings. It’s an unusual pairing for a value-oriented fund: two artificial intelligence (AI) memory chipmakers now lead a portfolio built on free cash flow (FCF). FCF is the cash a company has left after covering operating expenses, interest, taxes and capital expenditures.VFLO’s Index completed its scheduled quarterly rebalance in September 2026, adding Micron at a 4.20% weight as of September 18, 2026, and raising Sandisk from 1.83% to 3.88%. The rebalance lifted VFLO’s Information Technology weight from 25.74% to 30.26%. As of September 30, 2026, VFLO held 30.45% in Information Technology, compared with 20.62% for the Russell 1000® Value Index. The Victory U.S. Large Cap Free Cash Flow Index (the Index) makes no sector calls; the tilt reflects where its FCF yield and growth screens found qualifying companies.
VictoryShares and Solutions Client Portfolio Manager Michael Mack outlined why, in his view, this memory cycle differs from past ones.Key Takeaways
At its September 2026 rebalance, VFLO’s Index added Micron at a 4.20% weight and raised Sandisk from 1.83% to 3.88%. The two became the fund’s largest holdings as of September 18, 2026.
VFLO’s Information Technology weight was about 10 percentage points above the Russell 1000 Value Index’s as of September 30, 2026, a tilt driven by the Index’s cash flow screen rather than a sector call.
Together, Micron and Sandisk made up 8.46% of VFLO as of September 30, 2026, adding concentration in what’s been viewed as a cyclical industry.
See More: How the VFLO Index’s Free Cash Flow Screen Has Captured SaaS ResilienceHow Does VFLO’s Index Screen for Free Cash Flow?VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the “Index”), which applies profitability screens, then selects large-cap companies based on expected FCF yield. Expected FCF yield is the average of trailing 12-month and forward 12-month FCF, divided by enterprise value. By using enterprise value rather than market capitalization, the screen favors companies with lower net debt. A secondary growth screen then seeks to filter out value traps, or low valuations that reflect deteriorating fundamentals.
Micron and Sandisk qualified on that screen. Their expected FCF yields were 7.84% and 8.31%, respectively, as of September 10, 2026.Is the AI-Driven Memory Chip Cycle Different?Mack noted that market skeptics often fear that memory makers face imminent profitability compression, assuming higher memory prices will spur oversupply in this ongoing AI buildout. As industry context, he outlined three structural shifts that, in his view, distinguish this cycle:
Higher barriers to entry. Technical barriers have grown, leaving fewer competitors capable of producing advanced memory architectures at scale.
Multi-year pricing agreements. Micron and Sandisk are securing multi-year customer commitments that improve revenue visibility, which can help stabilize cash flow expectations and improve earnings visibility.
AI-driven demand. AI infrastructure requires large amounts of high-bandwidth and ultrafast memory, a demand driver that Mack expects to outlast traditional computing cycles.
The Index’s inclusion of both companies reflects its FCF yield and growth screens, not a view on the memory cycle.What Are the Trade-Offs?The flip side of the tilt is concentration. Memory demand and pricing have historically moved in cycles, and a downturn could pressure both companies’ cash flows at the same time. Because the Index reconstitutes quarterly, it would reflect any change in their FCF yields at a later rebalance rather than in advance.Where Does VFLO Fit in a Core Equity Portfolio?The addition of Micron and the higher Sandisk weight show how the Index’s quarterly rebalance responds to changes in cash generation. The next reconstitution takes effect after the close on Friday, December 18, 2026.
VFLO may complement a core equity portfolio by emphasizing value through FCF. The fund has a net expense ratio of 0.39% and a gross expense ratio of 0.42%.
Net expense ratios reflect the contractual waiver and/or reimbursement of management fees through October 31, 2027.
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VettaFi LLC (“VettaFi”) is the index provider for VFLO, for which it receives an index licensing fee. However, VFLO 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 VFLO.VFLO Top 10 Holdings as of September 30, 2026
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The Victory U.S. Large 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.
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