Stocks are weighted by earnings quality. Companies ranked the highest in earnings quality make up 40% of the index, whereas rank B, C, D earnings quality firms receive a 20% weighting. The 100 least promising stocks are disregarded from the index.
Specifically, the top holding is Avon Products (NYSE: AVP) at a 0.477% weighting – the company saw a 20% surge in stock price on better-than-expected earnings, followed by Marathon Petroleum (NYSE: MPC) with a 0.458% weighting.
The closest comparison may be the WisdomTree Earnings 500 Fund (NYSE: EPS), which uses a fundamental weighting methodology based on earnings momentum over the last four quarters, but it tracks the entire index.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.