RevenueShares is a niche ETF provider that may not be in the perpetual ETF spotlight. However,it is building unique funds designed to capitalize on new index-weighting methodologies.
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Currently, this company operates six ETFs designed to take a traditional market-cap weighted index, such as the S&P 500 or small-cap S&P 600, and re-weight the underlying components by total top-line revenue. The end result is a markedly different asset allocation than the traditional measure of a publicly traded company's outstanding share float.
RevenueShares Large Cap
The RevenueShares Large Cap Fund ( ETF ) (NYSE: RWL ) is an example of this strategy, based off the S&P 500 Index. Rather than Apple Inc. (NASDAQ: AAPL ) capturing the No. 1 spot in this fundamentally-weighted ETF, the top holding is Wal-Mart Stores, Inc. (NYSE: WMT ).
RWL is overweight consumer staples and energy stocks, while underweight technology and healthcare sectors.
RevenueShares recently expanded the scope of its offerings by introducing a global growth fund designed to capitalize on developed and emerging market countries. The RevenueShares Global Growth Fund ETF (NYSE: RGRO ) is comprised of the countries showing the best year-over-year percentage growth in GDP from the prior two quarters.
Each of the top five developed and emerging market countries are given a 10 percent weighting in the index, and the top 10 revenue producing stocks from those countries are selected. The end result is a diversified basket of 100 global securities that are revenue weighted according to their overall financial results.
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Unique Goal, Unique Execution
The goal of this style ETF is to capture countries showing strong relative momentum using fundamental screening criteria to select some of the largest and most liquid stocks. RGRO will have a net expense ratio of 0.70 percent and will trade on the NYSE ARCA exchange.
From a competitive standpoint, RGRO will go head to head with funds such as the First Trust Exchange Traded Fund VI (NASDAQ: IFV ). This ETF uses a relative momentum screening methodology to select the top five country-specific ETFs that are showing the most promising short-term performance.
Global and international ETFs were big underperformers last year, but have started 2015 showing more promise as further central bank easing has help calm fears over a wave of deflation.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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