On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discussed the VictoryShares Free Cash Flow Growth ETF (GFLW) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF.

Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week!

Yes, this is the ETF of the Week, where we examine trending, new, newsworthy, unique, and intriguing exchange-traded funds with the help of Todd Rosenbluth. He’s the head of research at VettaFi, and at VettaFi.com, their website has all the tools you need to make yourself a better, smarter, savvier investor in ETFs.

Todd Rosenbluth, great to chat with you again.

Your ETF of the Week is…

Todd Rosenbluth: The VictoryShares Free Cash Flow Growth ETF. GFLW.

Chuck Jaffe: GFLW, VictoryShares Free Cash Flow Growth ETF! So, a couple of things that we don’t always see in names. Like… Yes, you have growth there, but free cash flow. That’s a distinctive style. So explain what it is that you’re looking for, and why this fund now.

Todd Rosenbluth: So, this is a quality growth ETF. I tend to think of free cash flow as a wonderful metric to assess high quality in a company. Because if you’ve got strong free cash flow and it’s growing, that’s a positive sign. This ETF from VictoryShares came to market at the end of 2024. And it’s one of those funds that’s doing quite well. Doing quite well in that it’s gathering assets this year. Doing quite well that it’s actually outperforming the traditional growth benchmark, the Russell 1000 Growth this year, in an environment where high growth is a priority.

I think we’re going to see a bit more volatility in 2026. I think we all expected we were going to have more of it, but I think we’re going to see more of it actually occur in 2026. And so for people who are looking for a growth strategy, this is a factor-focused, smarter way of investing in growth, in my opinion.

Chuck Jaffe: It’s a fund that has done very well this year. It’s up more than 20%, which is a couple of percentage points ahead of the category. What is it doing to generate that kind of performance that puts it in the top quartile of its peer group?

Todd Rosenbluth: So, this takes a look at growth companies and assesses them based on their free cash flow generation. Both a forward-looking and a backward-looking approach. That’s, I think, different than some of the other quality metrics, quality-based ETFs that are out there that only look backward. This takes a forward-looking approach.

Now with a growth ETF, you’d expect to find technology stocks. And you will find them in here. But I notice when we’re looking relative to the Russell 1000 Growth that this is slightly underweight towards technology stocks. But it’s overweighted towards healthcare and industrial companies, as we’re talking in mid-December.

Now, this is an ETF that rebalances periodically. In fact, VettaFi is an index partner with VictoryShares in support of this. But what caught my eye is this fund has gathered over $500 million of assets this year. It’s now up to $650 million. That’s particularly compelling. I know you and I have talked a lot about active ETFs this year and the growth of active ETFs. This to me is a good example of — there’s still demand for an index-based strategy.

Chuck Jaffe: And at the same time, it is an index-based strategy that does include a couple of the biggest names, which is not a big surprise. You can’t really have a large growth fund and not have Nvidia and Alphabet and a couple of other names like that in the portfolio. So, large growth is the category where almost everybody… Of, you know, whatever your first mutual fund is, et cetera., large growth is… There’s a good chance that’s where people have stuff.

So, if people are going to look at this fund, we know they have the category. They may not have the allocation mix. If you’ve already got one growth fund, is it the style that gives you the diversification here, and it’s worth adding a little bit of portfolio complexity to do it? Or is there something else that’s going to drive that investment decision?

Todd Rosenbluth: So we’ve seen, I believe what we’ve seen, is that investors are using this as a complement to their growth strategy, either to reduce their concentration risk, or, and/or, just because this might be a better way of doing it. Let me stay on that concentration risk.

You’re right. Nvidia and Alphabet are the two largest holdings in the most recent look at it. But they’re roughly 4% each of the portfolio. And that’s intentional, because the index has a capping component to it. And so as I look through the top ten holdings or recent top ten holdings, I see Booking Holdings, I see DoorDash, I see Spotify Technology, Palantir.

These are all companies, growth companies people have heard of. But you won’t find the same exposure — you know, 2% to 4% exposure to these companies — in a Russell 1000 or even the Nasdaq 100 market cap-weighted approach, which is dominated by those Mag Seven stocks.

So, I think people are using this VictoryShares ETF, GFLW, to diversify away from the mega-cap companies — have some exposure, but not have all of their eggs in that basket, because those stocks won’t go up forever.

Chuck Jaffe: Expense ratio on this is 39 basis points, 0.39%. And I’m curious there, because we’ve talked a lot about expense ratios. And I know that it’s not a big determining factor as long as it doesn’t get, you know, too high or what have you. But I’m old enough to remember when 39 basis points would have been a big bargain on an actively managed large-cap growth fund.

Of course, the ETF revolution changed that and has made it that, you know, 39 basis points… Not bad. Not the best for you. And this is not a question I’ve ever really asked you. Is there a level where you go, “Hey, this is really expensive for an ETF in a big category like this”? And below?

Like, is there a level where you look and say, “For what I’m getting on an actively managed ETF that’s buying domestic stocks and not doing something that’s particularly tricky, I want to see an expense ratio below this, because anything above it strikes me as costly”?

Todd Rosenbluth: So, I think if you’re investing in a market cap-weighted approach, which is just simple and I guess a crude way of doing it, there’s nothing wrong with it. That’s just a simple way of doing it.

You’re going to find strategies that are 10 basis points or less. I think that actually the Russell 1000 growth ETFs might be a little bit higher, certainly the iShares one that is the largest of those products.

With active, or even in this case, index-based but factor — where it rebalanced a couple of times throughout the year as a result of a look at quality growth metrics — I think 39 basis points is reasonable. But to me, an expense ratio is one of those things on your checklist when you’re comparing ETFs.

And so if you look at the performance of this fund in the albeit short one-year time period, it has outperformed, I believe, the iShares Russell 1000 Growth ETF, despite being slightly more expensive. So, if that… That’s certainly a positive thing. And then you’d want to look at some of the other characteristics, as we talked about.

It’s not as concentrated; you get exposure to not just technology stocks within a growth ETF. Those are all those things I would want to consider when I’m looking at an ETF, and I would hope that investors and advisors would do that also. Not just looking at the cheapest ETF, but finding the best ETF for them.

Chuck Jaffe: Sometimes when we’re looking at a fund, you’re looking at it as something you add to the portfolio as a long-term holding. Sometimes it’s tactical. This seems, maybe smells to me, like this is long-term. You’d want to do this for that diversification of your large-cap sort of side of things. If you need some of that. But is this tactical, or is this that long-term hold?

Todd Rosenbluth: So, I think this is a strategic position to be able to have as a complement to your existing large-cap growth or large-cap oriented ETF that is tilted towards growth, because it’s concentrated. I don’t know if I have strong enough views, but heading into the year, many people are optimistic and are leaning towards some of those growth companies to continue to head higher, with consciousness from a valuation standpoint.

So this could be a tactical move as you start the year. And we see if the moderately bullish mindset continues.

And if that isn’t the case, then you might want to dial this back. There are other ETFs that offer a quality approach but are not as growth-oriented. In fact, I’d be remiss — we talked about one of those from Victory, VFLO. VFLO is the more value-oriented brother/sister/cousin of GFLW. You could be able to rotate between those two ETFs depending upon growth versus value.

Chuck Jaffe: And that would be an interesting way to play it. But this is an interesting pick as a potential add to a portfolio. It’s GFLW. GFLW, the VictoryShares Free Cash Flow Growth ETF, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff. See you again next week!

Todd Rosenbluth: Thanks a lot, Chuck. You too.

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe. And I’m Chuck Jaffe, and I’d love it if you check out my hour-long weekday podcast at MoneyLifeShow.com or by searching for it wherever you find your favorite podcast.

Now, if you’re searching for information on your favorite ETFs, or maybe something we talked about here that could be your next favorite ETF, no better place to go looking for information than VettaFi.com, where they’ve got a full suite of details and information that’ll help you out. They’re on X at @Vetta_Fi. Todd Rosenbluth, their head of research, my guest, he’s on X too at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along on your favorite podcast app, and we’ll be back with another ETF for you to consider again next week. But until then, happy investing everybody!

Note: This article was created in part through assistance from AI tools. The content has been thoroughly reviewed and edited by the author.

For more news, information, and strategy, visit the Free Cash Flow Content Hub.