It is not just large-cap stocks that are reaching new heights. In recent weeks, the U.S. equity market rally has grown to include mid- and small-cap stocks and ETFs. The mid-cap rally has taken an array of mid-cap ETFs to new heights.
An impressive member of the surging mid-cap ETF group has been the Oppenheimer Mid Cap Revenue ETF (NYSEArca: RWK), which is higher by 4.4% over the past month.
Revenue weighting could provide diversified exposure to the market, is not influenced by stock price, reflects a truer indication of a company’s value and offers stable sector exposure. Moreover, revenue weighting may provide a more value-oriented portfolio and historically outperformed in a value-driven market while showing lower drawdowns during growth-driven markets.
Because of the revenue-weighting characteristic, a fund strategy tilts away from potentially overvalued momentum stocks and leans more toward low valuation companies with low price-to-book. The revenue-weight factor could also provide a better or more diversified way for investors to participate in the markets over the long haul. RWK weights the components of the widely followed S&P MidCap 400 by revenue.
“By ranking through revenue instead of market capitalization, we remove the traditional index’s bias towards overvalued stocks while maintaining the transparency and broad diversification that has historically attracted investors to index strategies,” according to Oppenheimer.