Free cash flow investing has become one of the most popular factor-based approaches in the market, and for good reasons. Companies generating excess cash tend to have stronger balance sheets, greater financial flexibility, and more options to create long-term shareholder value. But not all free cash flow strategies are trying to accomplish the same thing.
FCF YIELD
Free cash flow yield helps identify companies generating significant free cash flow relative to their valuation. In many ways, it is a value strategy in disguise. While value can outperform, those periods tend to be cyclical, dependent on sector rotations and valuation re-rating cycles. Investors aren’t just making a free cash flow decision; they’re also making a value decision.
Why We Focus on FCF/ROIC (Free Cash Flow Return on Invested Capital)
FCF-ROIC framework seeks to identify businesses that generate significant free cash flow, allocate capital efficiently, and compound shareholder value over time. That’s where Return on Invested Capital (ROIC) comes in. Companies with high FCF-ROIC are typically better positioned to fund growth, pursue acquisitions, and strengthen their balance sheets.
How Active Management Contributes
The Abacus FCF-ROIC framework provides discipline, but active management adds informed decision-making. In 2025, many software companies still ranked highly on traditional FCF metrics, but as AI spending accelerated, our portfolio managers saw better opportunities elsewhere. We trimmed select software exposures and shifted toward the AI buildout: data center infrastructure, power generation, industrial equipment, and software supporting AI deployment. This combination keeps the portfolio aligned with the highest-quality opportunities as markets evolve.
Why We Built ABFL
The Abacus FCF Leaders ETF (ABFL) was built on a simple belief: generating cash is only half the story. What management does with that cash drives long-term shareholder returns.
Our FCF-ROIC framework targets businesses with durable competitive advantages, efficient capital allocation, and the ability to compound value over time. By focusing on quality and capital efficiency, ABFL has historically resembled a large-cap blend strategy rather than a traditional value strategy, seeking an all-weather approach to free cash flow investing. Since launching in September 2016, ABFL has delivered strong long-term returns with historically lower volatility and shallower drawdowns than the broader market. That’s what free cash flow investing should achieve: participation in long-term wealth-creation without relying on any single market style, sector, or factor regime.
Expense Ratio: 0.49%. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. Performance current to the most recent month-end and standardized performance can be obtained by calling (toll free 800-617-0004) or visiting abacusfcf.com/abfl/. Short term performance, in particular, is not a good indication of the fund’s future performance, and an investment should not be made based solely on returns.
The fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about investment company, and it may be obtained by calling +1 (800) 617-0004. Read it carefully before investing. There is no guarantee that ABFL will achieve its investment objective. Investing involves risk, including the possible loss of principal. Investments in the Fund include risks associated with small and mid-cap securities, which involve limited liquidity and greater volatility than large-cap securities. Free Cash Flow (FCF) represents the cash that a company is able to generate after accounting for capital expenditures. Securities are distributed by Quasar Distributors, LLC & Regional Investment Services, Inc, Member FINRA.
