SFLO vs SPHQ

SFLOCVictoryShares Small Cap Free Cash Flow ETF

SPHQAInvesco S&P 500 Quality ETF

In short

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.

SPHQ Live since 2005, SPHQ is an elder statesman of quality investing: rank the S&P 500 on profitability, earnings quality and balance-sheet strength, hold the top 100, charge 0.15% net of a waiver through August 31, 2028.

Stated mandate

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.

SPHQ The fund seeks exposure to the S&P 500 Quality Index and normally invests at least 90% of assets in common stocks included in that index.

Why people hold it

• 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.

• SPHQ 0.15% net of a waiver through August 31, 2028 (0.20% gross), below the median for quality factor funds and level with QUAL and FQAL at 0.15%.
• The rules are published and mechanical: score the S&P 500 on return on equity, accruals ratio and financial leverage ratio, take the top 100, weight by quality score times market cap.spglobal.com
• Universe discipline: candidates come only from the S&P 500, so every holding is an established large cap rather than a smaller name screened in from a broader pool.spglobal.com
• A multi-billion-dollar fund that trades actively, pays quarterly, and has run since 2005. It sits in the stronger tier of quality factor ETFs.

Worth knowing

• 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.

• SPHQ About 100 stocks, weighted by quality score times market cap, so the biggest high-scorers carry real weight. Narrower than owning the full S&P 500.spglobal.com
• The index rebalances semiannually, so a company whose fundamentals slip mid-period stays in the portfolio until the next reshuffle.spglobal.com
• Two peers undercut it on fee: JQUA at 0.12% and VFQY at 0.13%.

Full SFLO profile⁠

Full SPHQ profile⁠