What’s the value of a revenue-weighted exchange-traded fund?
Revenue-weighted strategies may provide these five benefits to investors:
- They can possibly offer enhanced performance potential versus a market-cap-weighted approach.
- These strategies historically capture more of the market’s upside while limiting the downside.
- Consistent revenue generation is a historical indicator of quality.
- Every company in the index has positive revenue and can be weighted by this metric, which isn’t true of other fundamental factors.
- Revenue is a top line figure that drives bottom line results.
The Oppenheimer Large Cap Revenue strategy looks to help investors capitalize on each of these benefits by offering access to the same broad basket of stocks as the S&P 500 Index.
Through a transparent investment process, the strategy re-weights the S&P 500 by each company’s revenue, producing a portfolio that we think is a potentially better representation of economic contribution to the index.
Weighting through revenue instead of market cap removes potential bias towards overvalued stocks while maintaining transparency and broad diversification.
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An investment in the Fund is subject to investment risk, including the possible loss of principal amount invested. Fund returns may not match the return of its respective index, known as non-correlation risk, due to operating expenses incurred by the Fund. The alternate weighting approach employed by the Fund (i.e., using revenues as a weighting measure), while designed to enhance potential returns, may not produce the desired results. Because the Fund is rebalanced quarterly, portfolio turnover may exceed 100%. The greater the portfolio turnover, the greater the transaction costs, which could have an adverse effect on Fund performance.
These views represent the opinions of OppenheimerFunds and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.