FQAL vs SFLO

FQALAFidelity Quality Factor ETF

SFLOCVictoryShares Small Cap Free Cash Flow ETF

In short

FQAL Fidelity's own quality screen, boxed into an ETF: roughly 130 U.S. companies picked for profitability, steady cash flow and clean balance sheets, at 0.15% a year, well under the typical fee in the quality-factor group.

SFLO Small caps are famous for companies that lose money. SFLO screens that universe for free cash flow and growth, then holds roughly 200 names, and it pays out monthly.

Stated mandate

FQAL The fund prioritizes U.S. companies exhibiting higher profitability, stable cash flows, and strong balance sheets.

SFLO The Fund seeks to track, before fees and expenses, the Victory U.S. Small Cap Free Cash Flow Index. It normally emphasizes U.S. small-cap equity securities selected through a rules-based free-cash-flow and growth methodology.

Why people hold it

• FQAL Costs 0.15% a year, roughly half the typical fee among quality-factor ETFs. That puts it in the cheapest tier of the group, alongside JQUA, VFQY and QUAL.
• The rulebook is Fidelity's own: the Fidelity U.S. Quality Factor Index, tracked tightly. One of the closer index implementations in its peer group.
• Live since 2016 and now a multi-billion-dollar fund, so this is a settled product rather than a launch still finding its footing.
• The screen is explicit about what it wants: higher profitability, stable cash flows, strong balance sheets. No vague 'quality' hand-waving.

• SFLO The whole point: a rules-based screen that ranks U.S. small caps on free cash flow and growth, so the cash-burners that populate the broad small-cap benchmarks get filtered out.
• Roughly 200 stocks. Concentrated enough that the cash-flow screen actually shows up in the portfolio, broad enough that no single name runs the show.
• Pays monthly, which is rare in small-cap equity funds where quarterly is the norm.
• It tracks a published index rather than a stock-picker's hunches, so the rules are the same every rebalance.

Worth knowing

• FQAL Roughly 130 stocks, not the whole market. A narrower bench means individual names and sector tilts carry more weight than in a total-market fund.
• Trading volume is light next to the category's biggest quality funds, which can show up as wider bid-ask spreads.
• Distributions come quarterly, but the screen hunts profitability and balance-sheet strength, not yield.

• SFLO The screen costs you: 0.56% a year, more than double the typical small-cap ETF, and many times what plain trackers like VB (0.03%), SCHA (0.03%) and IWM (0.19%) charge.
• Launched in December 2023, so the strategy has yet to be tested across a full market cycle.
• Trading is moderate rather than heavy, so spreads can be wider than the household-name small-cap funds, especially around the open and close.

Full FQAL profile⁠

Full SFLO profile⁠