Following its most recent rebalance in June 2026, the VictoryShares Free Cash Flow Growth ETF (GFLW ) welcomed three notable additions to its core holdings. These notable include heavy machinery giant Caterpillar Inc. (CAT), intellectual property holder Royalty Pharma plc (RPRX) and multinational tech company, Dell Technologies Inc. (DELL). Caterpillar, Dell and Royalty Pharma were held at 3.13%, 2.82% and 2.10% respectively in GFLW as of July 31, 2026.Why Free Cash Flow, and Why Rules-BasedFor a rules-based ETF like GFLW, the quarterly rebalance and reconstitution act as a systematic filter, highlighting where free cash flow (FCF) generation has been accelerating. FCF is the cash a company has left after covering operating expenses, interest, taxes and capital expenditures (Capex). Because Capex reduces FCF immediately and in full, we believe FCF often provides a cleaner read on operating quality than earnings, which can be distorted by non-cash charges and writeoffs. GFLW tracks the Victory Free Cash Flow Growth Index (the “Index”), which selects U.S. companies that have generated high FCF return on invested capital (FCF ROIC) and demonstrated the ability to compound FCF over time.
See More: VFLO Marks 3 Years of Next-Gen Free Cash Flow InvestingHow Does the Victory Free Cash Flow Growth Index Select Holdings?The Index narrows a broad U.S. equity universe to 100 large-cap growth companies through a four-step screen; the Index is reconstituted and rebalanced quarterly.
Step 1: Starting universe
The Index begins with the VettaFi US Equity Large/Mid-Cap 1000 Index, excluding Financials and Real Estate, and removes companies with a negative five-year FCF trend. From what remains, the 400 largest profitable companies advance.
Step 2: FCF ROIC screen
The top 150 companies by free cash flow return on invested capital (FCF ROIC) move forward. FCF ROIC divides Expected FCF by Invested Capital. Expected FCF averages trailing 12-month and next 12-month forward FCF. That forward-looking construction is what differentiates the screen from purely backward-looking quality measures.
Step 3: Growth screen
The 100 stocks from that group with the highest growth score advance to the final Index. The growth score blends sales trend, EBITDA trend and long-term earnings per share (EPS) growth estimates, so the final holdings are designed to pair profitability with growth momentum.
Step 4: Weighting
The 100 stocks are weighted by a combination of FCF size and one-year risk-adjusted momentum. Individual holdings are capped at 4% and sector exposure at 45% of the Index. No sector can exceed its starting-universe weight by more than 20 percentage points.
The result is a portfolio anchored in FCF ROIC, the metric that captures how efficiently a company turns invested capital into real cash. A growth overlay keeps the Index’s growth tilt consistent through market cycles.
The entry of Caterpillar illustrates this screening methodology. While Industrials are occasionally labeled as cyclical or value-leaning, we believe Caterpillar’s pricing power and operating efficiency can translate directly into strong FCF conversion. Meanwhile, Royalty Pharma qualifies on the strength of its royalty streams across commercialized therapies. The royalty streams produce low-overhead cash conversion. Dell rounds out the three notable additions as a technology leader that has continued to benefit from data center infrastructure growth. In our view, these new entries reinforce the Index’s design as a growth solution grounded in FCF ROIC.Why Free Cash Flow Matters for Growth InvestorsFor investors navigating a high-valuation environment, these additions strengthen GFLW’s FCF ROIC posture. On a quarterly basis, the Index systematically shifts weight away from companies that lean on rich price-to-earnings (P/E) multiples toward those that have been generating measurable cash returns on invested capital. We believe this creates a forward-looking growth allocation that can pair naturally with a broader growth sleeve.
Additionally, GFLW used in tandem with VFLO can create comprehensive exposure to FCF in a portfolio that spans value and growth style box allocations. That pairing could potentially sustain FCF market participation and exposure whether value or growth is leading the market.
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VettaFi LLC (“VettaFi”) is the index provider for GFLW and VFLO, for which it receives an index licensing fee. However, GFLW and VFLO are 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 GFLW and VFLO.Top 10 Holdings in GFLW as of July 31, 2026Disclosure InformationCarefully 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 //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 ETFs have 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 ETFs could also be affected by company-specific factors that could jeopardize the generation of free cash flow. Index Funds invest in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Funds may diverge from that of their Indexes. Large shareholders, including other funds advised by the Adviser, may own a substantial amount of the Funds 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. 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. Investments in companies in the industrials sector, including producers of durable goods and companies that process raw materials, may be adversely affected by changes in supply and demand for products and services, governmental regulation and changes in spending policies, world events and economic conditions. The profitability of companies in the healthcare sector may be affected by government regulations and healthcare programs, fluctuations in the cost of, and demand for, medical products and services and product liability claims. 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 Funds may frequently change its holdings, resulting in higher fees, lower returns, and more capital gains.
The Victory Free Cash Flow Growth Index focuses on high quality profitable companies that display a positive free cash flow trend. It selects larger cap companies with the highest free cash flow relative to invested capital that also exhibit higher growth.
VettaFi US Equity Large/Mid-Cap 1000 Index represents the 1,000 largest U.S. stocks.
Price-to-Earnings ratio is the price of a stock divided by its earnings per share.
Indexes are unmanaged; their returns include reinvestment of dividends and other income but do not reflect management fees, transaction costs or expenses. It is not possible to invest directly in an index. Past performance does not guarantee future results.
Distributed by Victory Capital Services, Inc.
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