Forget Cap Weighted ETFs and Buy These Funds Instead - ETF News And Commentary
21 Março 2014 - 8:51AM
Zacks
Although cap weighted ETFs still dominate the marketplace,
investors have witnessed a rise in ‘alternative’ weighting
methodologies as of late. These include funds that weight based on
revenues, dividends, or any number of other fundamental
metrics.
Revenue weighted ETFs have emerged as a competitor in the space,
but these funds rarely get the respect they deserve from investors.
This is despite the fact that there are some solid ideas backing up
the revenue weighting model, and especially when compared to cap
weighted products (see Revenue Weighted ETFs Crushing the
Market).
After all, many believe that revenues are harder to fake or alter
than company earnings on a quarter by quarter basis. Furthermore,
cap weighted products tend to put the most weight into companies
that have seen surging stock prices, a situation that
revenue-weighting can avoid. Plus, many revenue weighted products
have outperformed their cap weighted counterparts, leading further
credence to the idea that this is a superior weighting
methodology.
How to Play
Investors have a few choices in this space, but two great options
are the
RevenueShares Large Cap ETF (RWL) and the
RevenueShares Small Cap Fund (RWJ). Both of these
funds have Zacks ETF Ranks of 2 (Buy), while they have crushed
their market cap weighted counterparts in the process over the past
five years too (See all the top Ranked ETFs here).
For more on these funds, make sure to watch our short video on the
subject below:
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REVENU-SC (RWJ): ETF Research Reports
REVENU-LC (RWL): ETF Research Reports
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