RevenueShares' ETFs with Revenue-Weighted Stocks

In late February, Paoli, PA-based RevenueShares Investor Services LLC launched its first ETFs on NYSE Arca: RevenueShares Large Cap Fund (RWL), RevenueShares Mid Cap Fund (RWK) and RevenueShares Small Cap Fund (RWJ).

RevenueShares ETFs are ranking companies by revenue as opposed to capital-weighted indexes, which, by definition, buy stocks that are rising and sell stocks that are falling, and thus go against the conventional wisdom of "buy low, sell high" motto. As we reported earlier, such alternative strategies have also been initiated, for example, by WisdomTree Investments which has already carved out a niche for itself with a family of ETFs that weight stocks by earnings and dividends.

RevenueShares weight several existing Standard & Poor's benchmarks by sales. For instance, the RevenueShares Large Cap Fund has different sector weightings than the S&P 500. It is overweight in consumer discretionary and staples, financials and energy, and is light on technology and health-care stocks. Even though earnings in banking and financial stocks have been wiped out the past year on subprime and credit-crunch problems, their revenue have increased, which explains the fund's inclination towards the sector.