The Advantages of Free-Cash Flow in Portfolio Construction

11/30/23 • 25 min

Free-cash-flow yield is the surplus cash after expenses and investments divided by the price of the security. Free-cashflow yield has been used for a long time by active hedge funds. Now it has become part of the indexing landscape, competing for assets with other quantitative approaches. It has historically outperformed in markets that favored value stocks and shown resilience in growth markets. My guest today will explain why, in today's intangible asset-driven economy, traditional metrics like price to earnings and price to book face challenges, making free cash flow a more relevant valuation metric. We will discuss how advisors should think about free cash flow and the steps VictoryShares & Solutions has taken to enhance traditional approaches.

All investments involve some degree of risk.
-
Here are some resources to learn more about VictoryShares:

VictoryShares Free Cash Flow ETF (VFLO) Product Page- https://www.vcm.com/products/victoryshares-etfs/victoryshares-etfs-list/victoryshares-free-cash-flow-etf
VFLO Brochure- https://www.vcm.com/content/dam/vcm/campaigns/intermediary/VS%20VLFO%20IB.pdf
VFLO Factsheet- https://www.vcm.com/assets/etf/factsheet-pdf/VS%20VFLO%20FS.pdf
VettaFi Free Cash Flow Channel- https://www.etftrends.com/free-cash-flow-channel/

Distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Victory Capital Management Inc. or its affiliates.

A message from Advisor Perspectives and VettaFi: To learn more on this and other topics, check out our full schedule of upcoming CE-approved virtual events.

All investments involve some degree of risk.
-
Here are some resources to learn more about VictoryShares:

VictoryShares Free Cash Flow ETF (VFLO) Product Page- https://www.vcm.com/products/victoryshares-etfs/victoryshares-etfs-list/victoryshares-free-cash-flow-etf
VFLO Brochure- https://www.vcm.com/content/dam/vcm/campaigns/intermediary/VS%20VLFO%20IB.pdf
VFLO Factsheet- https://www.vcm.com/assets/etf/factsheet-pdf/VS%20VFLO%20FS.pdf
VettaFi Free Cash Flow Channel- https://www.etftrends.com/free-cash-flow-channel/

Distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Victory Capital Management Inc. or its affiliates.

A message from Advisor Perspectives and VettaFi: To learn more on this and other topics, check out our full schedule of upcoming CE-approved virtual events.

Previous Episode

New Ways for Advisors to Access Alternative Investments

With relentless market volatility and other stubborn headwinds, advisors must find an adequate portfolio balance for their clients. What role will alternative investments play in offsetting market challenges? In this episode, we dive into this question with Andrea Mody, U.S. wealth private markets head at Macquarie Asset Management. We discuss how Macquarie continues to be a trailblazer for the democratization of alternatives, how traditional asset managers are reorganizing to incorporate alternatives, the roadblocks for allocation and Andrea’s outlook for the space.
-

Here is a link to the Macquarie Asset Management home page- https://www.macquarie.com/au/en/about/company/macquarie-asset-management.html

Here is a link to the podcast I did with Andrea in November, 2021- https://www.advisorperspectives.com/podcasts/2021/11/05/democratizing-alternatives-for-the-advisory-channel

A message from Advisor Perspectives and VettaFi: To learn more on this and other topics, check out our full schedule of upcoming CE-approved virtual events.

Next Episode

The New “Clean Ocean” ETF

In mid-September, Rockefeller Asset Management, the asset management arm of Rockefeller Capital Management, and KraneShares, a leading global ETF provider specializing in China, climate, and uncorrelated assets, launched the KraneShares Rockefeller Ocean Engagement ETF (ticker: KSEA). The fund invests in public companies with significant impact on oceans and ocean resources, reflecting the meaningful investment opportunities within the blue economy.
KSEA aims to generate competitive returns and improve ocean health through shareholder engagement activity focused on pollution prevention, carbon transition, and ocean conservation. Holdings include companies from diverse sectors such as aquaculture, commercial fishing, waste management, renewable energy, and logistics, among others.

My guest, Casey Clark, will discuss this new ETF.
-
Here are a few links to resources:

Rockefeller Capital Management’s website- https://www.rockco.com/
Fact sheet for the KraneShares Rockefeller Ocean Engagement ETF (ticker: KSEA) - https://kraneshares.com/ksea/

A message from Advisor Perspectives and VettaFi: To learn more on this and other topics, check out our full schedule of upcoming CE-approved virtual events.

Diversification does not ensure a profit or guarantee against a loss.