Why Is Nvidia the Only Magnificent Seven Stock in the GFLW Free Cash Flow ETF?

GFLW tracks the Victory Free Cash Flow Growth Index (the Index), a rules-based methodology that selects for cash generation. To understand why the other six tech giants are absent, start with how the Index defines quality.

The Index screens for companies that combine strong free cash flow generation with growth. FCF is the money left over after a company covers operating expenses, interest, taxes and capital expenditures. CapEx (Capital Expenditure) refers to the money a company spends to buy, improve, or maintain long-term physical assets that will provide benefits over multiple years. Unlike earnings, FCF reflects CapEx immediately and in full, which is why it often can tell a different story than the income statement.

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FCF return on invested capital (FCF ROIC) measures how much free cash flow a company generates for every dollar of capital invested in the business. It is the core metric underpinning the Index methodology. Specifically, the Index uses expected FCF, the average of trailing 12-month FCF and next 12-month forward FCF, divided by invested capital. The forward-looking component is a deliberate design choice: a business is worth the present value of its future cash flows, so the Index looks forward, not only backward.

Nvidia clears this bar decisively. The company has converted its dominant position in artificial intelligence (AI) hardware into cash at scale, reporting a quarterly figure of $35 billion in FCF within its fourth-quarter earnings report for fiscal year 2026. Hyperscalers and enterprises pay up front for Nvidia’s hardware, and that up-front payment turns market share directly into cash generation relative to invested capital. That is the exact profile FCF ROIC is built to identify.

FCF ROIC identifies high-quality businesses, but that alone isn’t the whole GFLW story. The Index layers a growth filter on top of the ROIC screen and weights constituents by modified absolute momentum. Nvidia clears both hurdles: it has generated high FCF ROIC today and its forward Expected FCF points to continued cash-generation capacity.

That combination is what separates GFLW from a traditional growth ETF. Most growth strategies key off revenue or earnings growth, which can reward companies that grow revenue without generating cash. GFLW’s Index screens for profitable growth, measured in FCF rather than revenue or reported earnings.

Nvidia’s place in the Index illustrates the point. In a capitalization-weighted index, size alone earns inclusion. In GFLW’s Index, a multi-trillion-dollar market cap is neither a qualifier nor a disqualifier. What matters is whether the company has converted invested capital into cash at a high rate, and whether that cash generation is expected to continue.

1/ The Magnificent Seven (Mag 7) consists of Alphabet (GOOGL; GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA). As of 6/30/2026 GFLW held a 3.49% weight in NVDA.

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GFLW Top 10 Holdings as of 6/30/2026

VettaFi LLC (“VettaFi”) is the index provider for GFLW, for which it receives an index licensing fee. However GFLW 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 GFLW.

Carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. To obtain a prospectus or summary prospectus containing this and other important information, visit http://www.vcm.com/prospectus. Read it carefully before investing.

All investing involves risk, including the potential loss of principal. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, or changes in interest or currency rates. The VictoryShares Free Cash Flow Growth ETF (GFLW) has the same risks as the underlying securities traded on the exchange throughout the day. ETFs may trade at a premium or discount to their net asset value. Investing in companies with high free cash flows could lead to underperformance when such investments are unpopular or during periods of industry disruptions. GFLW could also be affected by company-specific factors that could jeopardize the generation of free cash flow. Index Funds invest in securities included in, or representative of securities included in, the Index, regardless of their investment merits. The performance of the Fund may diverge from that of the Index. Large shareholders, including other funds advised by the Adviser, may own a substantial amount of the Fund’s shares. The actions of large shareholders, including large inflows or outflows of cash, may adversely affect other shareholders, including potentially increasing capital gains. Investments concentrated in an industry or group of industries may face more risks and exhibit higher volatility than investments that are more broadly diversified over industries or sectors. Investments in companies in the industrials sector, including producers of durable goods and companies that process raw materials, may be adversely affected by changes in supply and demand for products and services, governmental regulation and changes in spending policies, world events and economic conditions. Derivatives may not work as intended and may result in losses. The value of your investment is also subject to geopolitical risks such as wars, terrorism, trade disputes, environmental disasters, and public health crises; the risk of technology malfunctions or disruptions; and the responses to such events by governments and/or individual companies.

The Victory Free Cash Flow Growth Index focuses on high quality profitable companies that display a positive free cash flow trend. It selects larger cap companies with the highest free cash flow relative to invested capital that also exhibit higher growth.

Indexes are unmanaged; their returns include reinvestment of dividends and other income but do not reflect management fees, transaction costs or expenses. It is not possible to invest directly in an index. Past performance does not guarantee future results.

VictoryShares ETFs distributed by Victory Capital Services, Inc. (VCS). VCS is not affiliated with VettaFi.

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