Traditional market capitalization-weighted indices are top heavy and expose investors to some of the most high-flying stocks of the current market. If investors are concerned about the potential risks of an overextended market, consider a revenue-weighted exchange traded fund strategy to focus on companies with better fundamentals.
ETF Trends publisher Tom Lydon spoke with Dave Mazza, SVP of Beta Solutions at OppenheimerFunds, at the 2017 Morningstar Investment Conference in Chicago April 26-28 to talk about smart beta solutions in the growing ETF space.
“There have been $25 billion in flows into smart beta year-to-date already,” said Mazza. “What’s interesting is investors are continuing to look for new strategies, whether or not it’s traditional cap-weighted passive, all the way up to traditional active, but in-between, there’s this new factor space, with smart beta.”
These smart beta ETFs include options that have the potential to outperform traditional cap-weighted indices at a much lower cost than actively managed funds.
For example, at OppenheimerFunds, there is a suite of revenue-weighted ETFs that focus on companies with high revenue generation, such as the Oppenheimer Large Cap Fund (NYSEArca: RWL).