Episode summary
Behind the ETFs: VFLO, TTEQ, and the Strategies Driving Them
ETF Prime
· · 1 hr 1 min · Hosts: Nate Geraci, Simeon Hyman · Guests: Lance Humphrey, Dom Rizzo
Summary
The host’s first discussion centered on Victory Capital’s free cash flow ETF suite, led by VFLO, and the case that free cash flow is a better way to identify both quality and value than older measures like price-to-book. The guest argued that quality should start with profitability and price, not just balance-sheet strength or earnings stability, and said VFLO is designed to capture companies generating substantial cash after expenses and reinvestment. He also said the fund’s rules-based process is meant to avoid emotional decision-making and value traps by using forward estimates, quarterly rebalancing, and a growth screen that removes the weakest names while preserving a value tilt.
The same guest said the strategy is useful in several roles: as a replacement for traditional value, as a complement to dividend funds, and as a way to reduce concentration relative to the S&P 500. He also highlighted related products such as GFlow, SFLO, IFlow, and GRIN, arguing that the free-cash-flow framework translates across growth, small-cap, and international markets.
The second conversation focused on TTEQ, an actively managed technology ETF built around what the guest called an “all-weather” framework. He said the fund seeks mission-critical technologies, secular growth, improving fundamentals, and fair valuation, while avoiding the concentration and classification quirks of broad tech benchmarks. He emphasized that the portfolio can own public and private names, including OpenAI and Anthropic, and said the current tech sell-off and AI debate make disciplined stock selection especially important.
Key takeaways
- The guest said VFLO starts with profitability and free cash flow rather than proxy measures like balance-sheet strength or dividend growth.
- The guest said VFLO’s rules-based rebalancing is designed to remove value traps and keep the portfolio near a 50% discount to the broad market while lifting growth.
- The guest said free cash flow is useful across styles, pointing to SFLO for small caps and GRIN for international growth as extensions of the same framework.
- The guest said TTEQ is built to avoid the concentration and sector-classification problems of passive tech ETFs like XLK, VGT, and QQQ.
- The guest said TTEQ uses an “all-weather” approach to own mission-critical tech names, including selected private companies, while keeping position sizes disciplined.
Notable quotes
“I believe free cash flow is just simply a more effective measure to identify the fundamental health of the company”
“what we're looking for when we think of a quality investment is a company that's generating a lot of profitability and one that's trading at an attractive price”
“we do believe that by using a systematic approach, it allows us to identify or seek to identify those mispricings in markets and in an unemotional and systematic way act on those”
“I've come to the conclusion that I believe free cash flow is just simply a more effective measure to identify the fundamental health of a company”
“I really wanted us to be like a pure technology strategy strategy that gives you the technology beta you want with the alpha potential you seek”
How the episode opens
I've come to the conclusion that I believe free cash flow is just simply a more effective measure to identify the fundamental health of the company. All right, joining me will be Lance Humphrey, head of portfolio management with the Victory Shares and Solutions team at Victory Capital, who currently offers 23 ETFs, just over $21 billion in assets. And I will tell you, this is an issuer who continues to climb up the ETF leaderboard.
Uh they've already had about $1.7 billion in inflows this year and $5.5 billion in inflows over the trailing one year. I show them now as a top 30 ETF issuer overall. And if you're not familiar, I should note that Victory Shares is actually a part of Victory Capital, which is a 300 plus billion dollar global asset manager, over $300 billion.
But Lance and I are going to focus in on the ETF lineup and specifically their free cash flow suite of ETFs which does include their most popular product, the Victory Shares free cash flow ETF, ticker Vflow. So we'll get into what's behind the popularity of that ETF and why Victory Shares is using free cash flow yield as a primary screen here. We'll also talk quality investing more broadly and then we'll discuss what Lance views as really the value proposition of a rules-based approach versus traditional active management.
So, this should be an excellent conversation. Now later I'll be joined by Dom Rizzo, portfolio manager for the Troll Price Technology ETF, ticker TTEQ, and he's also PM on a similar mutual fund, the Troll Price Global Technology Fund, ticker PRGTX. But we're going to dive into the ETF, which I know Dom refers to as an all-weather tech strategy.
So, I want to have him explain why that is and how this ETF compares to some of the other popular index-based and active tech ETFs on the market, which by the way, TTEQ does own some private companies including OpenAI and Anthropic.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- free cash flow etfs
- etf portfolio management
- victoryshares strategies
- technology etfs
- active etf management
Companies and tickers mentioned
- Victory Capital
- T. Rowe Price
Watch the episode
Watch “Behind the ETFs: VFLO, TTEQ, and the Strategies Driving Them” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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