The VictoryShares Free Cash Flow ETF (VFLO B+) held 17.22% in healthcare as of October 31, 2026, compared with 13.69% for the Russell 1000® Value Index. The gap comes from the cash healthcare companies generate, not from a sector call. The Index VFLO tracks, the Victory U.S. Large Cap Free Cash Flow Index (the “Index”), ranks companies on free cash flow (FCF)* yield and then on growth. At its latest quarterly reconstitution, 14 of the 75 companies that advanced on FCF yield were in healthcare, second only to energy, and 10 of them made the final 50. Those 10 holdings averaged an expected FCF yield of 7.40%, more than double the Russell 1000 Value Index’s 3.29%.Key Takeaways
VFLO was overweight healthcare by 3.53 percentage points (pps) relative to the Russell 1000 Value Index as of October 31, 2026 (17.22% vs. 13.69%).
The Index doesn’t set sector weights; healthcare companies make the cut when their expected FCF yields and growth scores place them in the top 50.
Managed care companies Centene Corporation (CNC) and The Cigna Group (CI) were VFLO’s two largest healthcare holdings as of October 31, 2026, at 3.32% and 2.72%.
Why it matters for investors: VFLO’s sector exposure differs meaningfully from a traditional value benchmark’s. As of October 31, 2026, it held more healthcare, energy, and information technology than the Russell 1000 Value Index and no financials. Its overlap with a benchmark-style value fund may be smaller than the “value” label suggests.
See More: How the VFLO Index’s Free Cash Flow Screen Has Captured SaaS ResilienceHow Does VFLO’s Sector Mix Compare With the Russell 1000 Value Index?Healthcare is one of several sector differences, and not the largest. As of October 31, 2026, VFLO held 18.47 pps more in energy and 10.76 more in information technology than the benchmark. It held no financials, which made up 18.43% of the Russell 1000 Value Index, because the Index excludes financials and real estate investment trusts (REITs). VFLO’s portfolio also traded at a forward price-to-earnings (P/E) ratio of 11.04, versus 17.81 for the benchmark, on FactSet’s measure.
Sector Weights: VFLO vs. Russell 1000® Value Index, as of October 31, 2026How Does VFLO’s Index Select Its Holdings?The Index starts with the 400 largest profitable U.S. companies, excluding financials and REITs. The Index ranks companies by expected FCF yield, which divides expected FCF by enterprise value. Expected FCF is the average of a company’s trailing 12-month and next 12-month forward FCF. Because the Index measures FCF against enterprise value (EV), or market capitalization plus debt minus cash and cash equivalents, rather than market capitalization alone, a company’s debt counts against it.
The 75 companies with the highest expected FCF yields advance to a growth screen. That screen ranks them on a growth score, which blends sales trends, trends in earnings before interest, taxes, depreciation and amortization (EBITDA) and long-term earnings per share (EPS) growth estimates. The 50 with the highest scores form the Index.
The growth screen is designed to filter out value traps, or stocks that look inexpensive on cash flow but have weakening fundamentals.Why Does Healthcare Rank Well on the Index’s Screens?Healthcare’s weight reflects which and how many of the sector’s companies ranked among the top 50. At the Index’s latest quarterly ranking, the sector stood out on cash generation. Its median expected FCF yield was 4.28%, compared with 3.82% for all 400 eligible companies, and its companies made up 14 of the 75 that advanced on FCF yield. Ten of those 14 also ranked among the top 50 on the growth screen. Centene ranked second of 400 on expected FCF yield, at 11.56%, and sixth on growth.
Because the Index re-ranks its universe each quarter, these weights can shift as companies’ FCF yields and growth scores change. The next rebalance is scheduled for December 18, 2026, at market close.
*Free cash flow (FCF) is the cash a company has left after covering operating expenses, interest, taxes and capital expenditures. FCF yield measures that cash relative to a company’s enterprise value.
Index ranking data: VettaFi, FactSet, as of September 10, 2026. Sector weights: FactSet, as of October 31, 2026.
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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.
Top 10 Holdings: VFLO, as of October 31, 2026Disclosure Information
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All investing involves risk, including the potential loss of principal. 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. 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. 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. 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. 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. 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 Fund may frequently change its holdings, resulting in higher fees, lower returns, and more capital gains. 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. 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.
The Russell 1000® Value Index is a market-capitalization-weighted index that measures the performance of Russell 1000® Index companies with lower price-to-book ratios and lower forecasted growth rates.
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