Get Comprehensive Value With This Cash Flow ETF Combo

Growth continues to be a standout performer, though elevated interest rates and geopolitical friction continue to add a dose of uncertainty. With that, value exposure is still a vital component for constructing a balanced portfolio. ETFs focused on the value factor provide easy ingress, but a plethora of options could easily give investors analysis paralysis. Here’s a two-ETF combo that can make the decision-making process easier: the VictoryShares Free Cash Flow ETF (VFLO) and the Putnam Focused Large Cap Value ETF (PVAL).

The modern definition of value now goes beyond the principles espoused by Benjamin Graham and his famed disciple Warren Buffett. While metrics like price-to-book ratio and “margin of safety” can still apply, there’s one simple metric that can quantify value: free cash flow (FCF). This is the remaining cash after deducting operating expenses from operating cash flow. The byproduct is funds that can be used to reinvest in operations, buy back stock, offer dividends, or engage in other activities that can increase shareholder value. It’s also a common denominator between VFLO and PVAL. By pairing both funds, investors can capture a comprehensive approach to value that prioritizes financial health over market sentiment. It’s a combo that targets the signal (FCF) and excludes market noise.

VFLO: The Passive FCF Filter

Under the proverbial hood, VFLO tracks the Victory U.S. Large Cap Free Cash Flow Index (the Index). Inclusion within the Index hinges upon a company’s expected free cash flow (a forward-looking measure of a company’s future cash flows) as opposed solely to relying on past data from trailing cash flow figures. That results in a more targeted focus on whether a company can continue growing its cash flow operations minus capital expenditures. The Index screens in companies that are relatively undervalued with attractive growth prospects.

VFLO’s systematic approach is ideal for today’s market because it inherently biases the portfolio towards value. By selecting firms that can self-fund operations and distribute capital to shareholders without relying on external financing, VFLO provides a defensive ballast that remains robust even during tight credit conditions.

See More: Free Cash Flow May Help Absorb the Impact of a Downturn

PVAL: The Active Complement

Like VFLO, PVAL separates itself from traditional value funds by centering its fundamental research on FCF. Putnam’s portfolio managers prioritize future cash flows over reported earnings to uncover market mispricings and identify companies exhibiting value. This disciplined focus allows the fund to target resilient, underappreciated businesses possessing the financial ability to reward shareholders through sustainable dividend growth and strategic buybacks. Ultimately, prioritizing FCF helps PVAL isolate true value creation while minimizing downside portfolio risk.

In a current market environment that can be prone to swings, PVAL’s active management allows for a nuanced assessment of intrinsic value that algorithms may sometimes overlook. In essence, PVAL captures established businesses that are often temporarily mispriced by the market due to cyclical headwinds rather than structural flaws through the flexibility of an active ETF.

Same FCF, Different Portfolios

ETFs obviously don’t have to stand in isolation. They can be mixed and matched with other assets as well as other ETFs to attain targeted exposure to specific asset classes, geographic regions, or thematic growth vectors while fine-tuning a portfolio’s aggregate risk and yield profile. In the case of combining VFLO and PVAL, the duo can capture a synergistic tilt towards value. This is achievable due to their differing portfolios, though both focus on FCF.

Comparing the holdings of both funds (dated June 1, 2026 for VFLO and March 30, 2026 for PVAL), the only overlap is General Motors and NRG Energy Inc. Both VFLO and PVAL maintain high-conviction portfolios that hover around 50 holdings.

Because VFLO screens out financials and real estate entirely, it focuses its cash-flow-seeking power into sectors with clean, unmistakable capital expenditures — primarily information technology, healthcare, and industrials. In contrast, PVAL views financials and real estate as prime hunting grounds for companies with strong FCF that the broader market underappreciates. Together, VFLO and PVAL seamlessly blend algorithmic factor discipline with multi-sector diversification to capture cash-generating companies across all sectors.

VFLO-PVAL Value Synergy

By blending the two respective approaches of both funds, the VFLO-PVAL combo captures the breadth of a data-driven, systematic screening process in VFLO with PVAL’s high-conviction, bottom-up fundamental analysis. This integration provides heightened economic resilience. In an environment where the cost of capital is a significant constraint, companies with proven cash-generation capabilities can maintain dividends, fund buybacks, and navigate various economic cycles.

Or, alternatively, investors can add VFLO or PVAL individually to complement an existing broad equities portfolio. In the end, investors can build a resilient, cash-focused value allocation designed to capture growth without sacrificing the fundamental discipline that defines long-term market success.

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VettaFi LLC (“VettaFi”) is the index provider for VLFO, 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.

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