“Following the Global Financial Crisis, managers began to develop more sophisticated Smart Beta strategies better positioned to weather volatile markets, especially risk-oriented funds,” David Mazza, Head of Beta Solutions Investment Marketing and ETF Specialists at OppenheimerFunds, said. “While this exponential growth is a small part of all Passive Funds and ETFs, Smart Beta strategies are becoming a part of every investors toolkit to generate outperformance for their clients.”
At Oppenheimer, they believe that revenue-weighting is one way to help investors potentially enhance returns and diminish risk exposure. Due to the revenue-weight tilt, investors won’t be exposed to trendy, overpriced stocks that market cap-weighted indices are prone to be, and investors will hold companies with more attractive valuation characteristics with a slight value tilt.
“By rebalancing the portfolio every quarter towards companies that have had persistent sales, revenue weighting keeps the portfolio from getting ahead of itself in overheating markets like the tech bubble of the early 2000’s,” Mazza said.
OppenheimerFunds offers a suite of revenue-weighted ETFs that specifically focus on companies with high revenues, including the Oppenheimer Large Cap Revenue ETF (NYSEArca: RWL), Oppenheimer Mid Cap Revenue ETF (NYSEArca: RWK), Oppenheimer Small Cap Revenue ETF (NYSEArca: RWJ), Oppenheimer Ultra Dividend Revenue ETF (NYSEArca: RDIV), Oppenheimer Financials Sector Revenue ETF (NYSEArca: RWW), Oppenheimer ESG Revenue ETF (NYSEArca: ESGL) and Oppenheimer Global ESG Revenue ETF (NYSEArca: ESGF).
Financial advisors who are interested in learning more about smart beta or factor-based index ETFs can watch the webcast here on demand.