Revenue WeightingOffers Advantages to Market-Cap Weighting
Revenue-weighted strategies offer three main advantages over traditional market-cap-weighted strategies.
Broad market coverage with greater exposure to attractively valued companies
Revenue weighting offers diversified equity market exposure but, by weighting companies based on their revenue, rather than their stock price, it increases the strategy’s exposure to attractively valued stocks compared to a market-cap-weighted index.
Anchored by fundamentals, not investor sentiment
Disciplined quarterly rebalancing toward companies with lower valuations mitigates concentrations in stocks that may be overpriced. It also helps maintain consistent sector exposures.
Strong historical long-term outperformance
Each U.S. core equity revenue weighted strategy has outperformed its respective Morningstar category benchmark over a 10-year period.
What is Revenue Weighting?
A closer look at this unique weighting approach to the market.