In an effort to differentiate itself from competitors in its line of exchange traded funds (ETFs), RevenueShares has opted to focus on factors that determine the health of a company in the long run.
As the name might imply, revenue is the end-all, be-all in RevenueShares ETFs. Most ETFs weigh holdings by market capitalization, but RevenueShares weighs stocks based on sales, reports Alexandra Zendrian of Forbes. Its funds are rebalanced once each year on Sept. 30, because quarterly rebalancing could lead to too many fluctuations.
Why revenues? Because it’s a number that’s difficult to fudge.
Dividends can be adjusted, earnings can be moved around by taking writeoffs and doing fancy accounting. The provider feels that revenues are simply a more consistent number to look at.
Another reason the provider has gone with revenues is because all companies have a revenue.
The provider says all of its funds are beating their underlying indexes year-to-date, RevenueShares Small Cap Fund (NYSEArca: RWJ) being the best performer. (More on revenue-weighted ETFs).
For more stories on asset class ETFs, visit our asset class ETF category.
Some of RevenueShares ETFs include:
- RevenueShares Large Cap Fund (NYSEArca: RWL): up 26.3% year-to-date
- RevenueShares Mid Cap Fund (NYSEArca: RWK): up 44% year-to-date
- RevenueShares Small Cap Fund (NYSEArca: RWJ): up 36.7% year-to-date
Kevin Grewal contributed to this article.