Investing based on top lines can fatten your bottom line
Thursday, October 17, 2013 - 02:35
RevenueShares Large Cap ETF has consistently beaten the SPDR S&P 500 ETF, despite holding the same companies. The reason? It puts the emphasis on firms' revenues, not their market caps.
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A common way to measure the growth of companies is profit. -- you can go step by cutting costs. Not so with revenue. And betting on companies that excel at growing their top two lines that helped investors boost their bottom. And -- little known index fund that weight companies by revenue instead of the standard market cap is beating it. Big name -- it. Revenue shares large cap ETF -- RWL. Has consistently outgunned its market cap counterpart spdr S&P 500 -- asked -- why. On an annual basis. This year over three years and by ten percentage points since it was launched in the death of the Great Recession in 2008. -- with revenue shares small cap on vs fighters S&P 600 ETF FLY. But let's focus on large camps. Both funds hold this thing stopped. A look at their top ten holdings. And you'll see why they -- differently. RW -- overweights low margins sectors with big revenues such as retail in energy but underweights technology. It's top holding is Wal-Mart the world's largest retailer. Just one heck he makes its list apple at number four and energy companies take three spots now look at asked -- why -- on top. Microsoft makes a cameo at third. Wal-Mart is a no show and Phillips 66 is -- six so there's one less energy company. He -- database managing director Michael Johnson says. Revenue shares gets mileage out of companies that grow revenue at a time when others are simply boosting earnings through cost cutting instead of through sales. RWL gets five stars on Morningstar and ranks highly on Lipper. One weak spot back testing shows it under performs one the economy turns down. It's consumer discretionary stocks got slammed in 2000. Vincent -- is chairman of the company that owns revenue shares. -- associates. -- -- -- -- We -- to perform. Most of the time but that's only not only last about six months typically in any procession. When the market bottomed in march of 09 RWL took off and pulled away from SP one. Another issue RW -- charges half a percentage point in fees that's five times more than dirt she asked he why. So far it's outperformance as offset those higher charges.
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