Sales are a company’s lifeblood and the foundation of its success, but investors generally focus on earnings that are often manipulated after passing through various accounting filters.
RevenueShares, a division of Philadelphia-based RIA and investment consulting firm VTL Associates LLC, is so focused on the top-line that it’s in its name and is the basis for its suite of seven revenue-weighted exchange-traded funds.
Thanks to a licensing agreement with Standard & Poor’s, RevenueShares takes certain S&P indexes and converts them into its own revenue-weighted indexes that underlie six of its funds. With most of these funds, RevenueShares’ indexes contain the same securities as their benchmark S&P indexes, but in different proportions based on their revenue.
RevenueShares’ six S&P-related funds are based on the S&P 500, S&P 500 Financials Sector, S&P 400, S&P 600, S&P 900 and the S&P ADR indexes.
The seventh fund is linked to the Navellier Overall A-100 Index, which is based on the quantitative methodology employed at Navellier & Associates Inc. that seeks to identify the 100 highest quality U.S. stocks. As with the S&P-related funds, the RevenueShares index underlying its Navellier-focused fund is a revenue-weighted reworking of the benchmark Navellier index.
RevenueShares rolled out six of its funds in 2008 and 2009, and earlier this month launched its seventh fund, the RevenueShares Ultra Dividend Fund (RDIV), which provides exposure to the 60 highest-yielding dividend stocks in the S&P 900. The stocks are ranked by the average 12-month trailing dividend yield in each of the previous trailing four quarters. RDIV tracks an index that yields 4.92 percent, one of highest of all U.S. dividend focused ETFs.
The fund has an expense ratio of 0.49 percent, and its largest allocations comprise the utilities, telecom and consumer staples sectors.
VTL and RevenueShares founder Vince Lowry says the new fund is based on his belief that we’re in a long-term secular bull market where interest rates will remain low for an extended time period. “Given that environment, we wanted our next venture to be a dividend ETF,” he says.
True Economic Measure
Along with VTL’s consulting work for institutions, the company provides advisory services in the areas of ETFs and separate account management to institutions, RIAs and broker-dealers. When it decided to launch its own funds, it wanted an approach that gave it an edge against the competition. It began with the premise that the S&P 500 outperforms 80 percent of money managers over the short term and nearly all of them over the long haul.