RWL: A Revenue Weighted Smart Beta Strategy That Has Delivered Results

As far as ETF providers go, Oppenheimer isn’t usually one of the first names that comes to mind. With just $2 billion in total ETF assets under management, the company is not a big player in the space. With four of their five ETFs that have enough history rated either 4- or 5-stars by Morningstar, perhaps they should carry a little more prominence.

Oppenheimer puts a little different spin on their equity ETFs in that they use a revenue weighting strategy in their portfolios instead of the traditional method of market weighting. It’s a smart beta strategy that attempts to limit the fund’s exposure to overvalued and momentum stocks and reallocate to companies that simply generate a lot of sales. Consider, for example, the Oppenheimer Large Cap Revenue ETF (RWL). It uses the revenue weighting strategy on the S&P 500 (SPY). The main difference that the revenue weighting strategy produces on the S&P 500 is that it cuts the index’s allocation in technology in half and largely redistributes those assets to consumer stocks.

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