A trio of new exchange traded funds (ETFs) launched on Friday, taking a different twist on the Standard & Poor’s benchmarks.
They will use the same stocks as the S&P but the ETF will weight names by revenue rather than market-cap sizes, reports Murray Coleman for Index Universe. Sean O’Hara, president of RevenueShares Investor Services, says that weighting by revenue was the most efficient way to keep the S&P benchmarks’ lineup the same while providing different patterns of return.
Some analysts don’t like the price so far: 0.49% in annual fees. O’Hara says that the returns based on back-tested data still would have been better than the S&P 500’s average annualized 11.4% between 1991-2007.
The new underlying indexes were created so investors wouldn’t fall prey to security selection bias. The new ETFs are:
- RevenueShares Large-Cap Fund (RWL): Aims to take the best of the S&P 500
- RevenueShares Mid-Cap Fund (RWK): Designed to complement the S&P 400
- RevenueShares Small-Cap Fund (RWJ): Replicates S&P 600
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.