Expanding on its line of revenue-weighted exchange traded funds, OppernheimerFunds has rolled out three new options to assist investors in gaining access to global markets with more attractive fundamentals.
“We are extremely happy to be rounding out our Revenue suite, which was primarily focused on U.S. stocks,” Dave Mazza, Head of Beta Solutions Investment Marketing and ETF Specialists for OppenheimerFunds, told ETF Trends in a call.
On Thursday, OppenheimerFunds launched the Oppenheimer Emerging Markets Revenue ETF (NYSEArca: REEM), seeks to outperform the MSCI Emerging Markets Index with an expense ratio of 46 basis points, Oppenheimer Global Revenue ETF (NYSEArca: RGLB), seeks to outperform the MSCI All Country World Index with an expense ratio of 43 basis points, and Oppenheimer International Revenue ETF (NYSEArca: REFA), seeks to outperform the MSCI EAFE Index with an expense ratio of 42 basis points.
The signature revenue-weighted methodology weights component holdings based on their trailing 12 month top-line revenue instead of traditional market capitalization, with a maximum 5% portfolio weight for any single issuer.
“As an investor, I want to improve outcome over the long-term,” Mazza said. “The revenue-weighted suite reduces the potential of momentum or sentiment driven stocks to become overvalued.”
As the bull market extends, investors tend to forget about valuations and continue to ride high-flying stocks, which may potentially expose investors to risks, such as a quick drawdown. Additionally, in an extended bull run, traditional market capitalization-weighted indices become top heavy and expose investors to some of the most high-flying stocks of the current market.
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.
Now, with the addition of the global, international and emerging market options, investors interested in this fundamentally driven, smart beta indexing methodology may better diversify their portfolios.
REEM top country weights include 23.5% South Korea, 20.8% China and 10.4% Taiwan, along with large names like Samsung Electronics 3.7%, Hon Hai Precision 2.6% and China Construction Bank Corp 1.9%.
RGLB has global exposure, including 32.8% U.S., 15.1% Japan and 5.6%, among others. Top holdings include Israel Chemicals 1.8%, Wal-Mart 1.3% and Elbit Systems 1.0%.
Lastly, REFA focuses on countries outside the U.S., so investors with a heavy U.S. stock market exposure may utilize this ETF to better diversify with global exposure, including 31.6% Japan, 12.1% U.K. and 11.8% France, among others. Top companies include Israel Chemicals 3.9%, Elbit Systems 2.2% and Toyota Motor 1.7%.
“Our newest ETF solutions were created in direct response to our clients’ growing appetite for revenue-weighted strategies in the global marketplace,” Sharon French, Head of Beta Solutions at OppenheimerFunds, said in a note. “Our approach offers a durable value proposition, with attractive risk-adjusted performance and the broad market diversification that has historically attracted investors to index strategies.”
OppenheimerFunds also 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).