While flashy AI-themed ETFs dominate headlines, a quieter strategy is attracting serious money. Pacer ETFs and Victory Capital have pulled in tens of billions for funds targeting free cash flow yield, a metric that shows how much cash companies generate beyond their investment needs.

This shift comes as traditional value investing loses traction. Instead of hunting for dollars of assets or earnings trading at deep discounts, investors now seek companies generating genuine distributable cash. The approach resonates with legends like Warren Buffett, Charlie Munger, and other respected investors who have long prioritized cash over accounting profits.

These funds are outperforming despite market obsession with artificial intelligence plays. The strategy filters for businesses that actually convert profits into spendable cash, avoiding the accounting magic that can inflate earnings without creating real value.

However, any mechanical screening method risks missing nuance. Companies with strong cash flow today may face structural challenges tomorrow, making pure quantitative approaches imperfect tools for long-term investing.

The move toward free cash flow reflects investor hunger for measurable returns in an era of speculative excess.