ETF Database » RWK

Not All Mid Cap ETFs Are Created Equal

Stoyan Bojinov — Mon, 14 Nov 2011 12:00:00 +0000

Ongoing worries of a global economic slowdown coupled with Euro zone debt woes have prompted many investors to reallocate capital to safer corners of the market in recent months. U.S. large cap stocks have been a popular destination, largely considered a “safe haven” amongst equity investors, as this asset class has staged an impressive comeback since earlier in October of this year. However, investors looking to further diversify the equity portion of their portfolio ought to take a closer look at mid cap U.S. equities. Mid caps are often overlooked, although research suggest that this asset class can offer an appealing risk/reward profile relative to large cap stocks [see 25 Things Every Financial Advisor Should Know About ETFs]. Investing in mid cap equities may be appealing to investors who are seeking out the potential for significant capital appreciation while still maintaining relatively “safe” exposure, unlike small and micro cap stocks [...]

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Are Your Cap-Weighted ETFs Leaders Or Laggards?

Cathy Carlson — Tue, 13 Jul 2010 16:07:03 +0000

The rapid growth of the ETF industry in recent years has altered the investment landscape in more ways than one. The low expense ratios offered by most exchange-traded products have brought increased scrutiny on active managers and called into question their ability to add value to client portfolios. The immediate diversification offered by a basket of securities has caused some to shift away from the complex research associated with individual stock picking towards more macro analysis required for tactical strategies. And as indexes have evolved from hypothetical measures of performance to essentially investable assets, the methodologies utilized in the construction and maintenance of benchmarks have become increasingly important to investors [see our database of ETF indexes]. The first generation of equity ETFs was dominated by market capitalization-weighted strategies, a methodology that involves assigning a weight to each component based on the total value of its equity. Most of the assets [...]

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Revenue Weighted ETFs Continue Impressive Run

Michael Johnston — Tue, 30 Mar 2010 15:47:17 +0000

The rise of the ETF industry has changed a lot about the business of investing. It has altered the way investors look at expenses, making it difficult to justify handing over 200 basis points (or more) each year to an active manager who can’t regularly beat a benchmark. It has also expanded the universe of investable securities; asset classes that were once available only to the biggest and richest investors (such as hedge fund strategies and commodities) are now readily available to anyone with an online broker. ETFs have also changed the way investors look at indexes. When indexes were primarily benchmarks used to measure manager performance, few gave much thought to the rules or investment theses governing the construction and maintenance. But as indexes have evolved into (essentially) investable assets, the underlying methodologies have been more carefully scrutinized. As a result of this increased scrutiny, some of the flaws [...]

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Beyond MDY: Three Outperforming Mid Cap ETFs

Michael Johnston — Tue, 22 Dec 2009 08:00:06 +0000

As 2009 draws to a close, it appears that this will be another “year of the mid cap.” Although equities of all sizes have posted strong gains this year (particularly when compared to 2008), mid caps have led the way, and mid cap ETFs have generally outperformed their small and large cap peers. Some investors take a “barbell” approach to the domestic equity portion of their portfolios, allocating assets primarily to large cap and small cap ETFs, and anticipating that the risk and return profile of mid caps will fall somewhere in between. While they fall between these two groups in size, the same can’t always be said for performance: mid caps have been known to deliver returns both excess and inferior returns. Mid Cap ETFs ETF YTD Performance RWK 51.0% FNX 45.8% CZA 42.1% MDY 35.1% As of 12/21/09 For investors looking to gain mid cap exposure, the most [...]

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Best Performing ETFs Of 2009

Michael Johnston — Mon, 21 Dec 2009 12:00:53 +0000

Following a year that saw some of the worst performances in recent memory, many asset classes have bounced back in 2009. But some have performed better than others, and as the year draws to a close we take a look at some of the best-performing ETFs. The year’s top gainers include a few of the largest and most-heavily traded funds, but the majority of those that made the list are lesser known ETFs likely off the radar of many ETF investors. Each of the 900-plus ETFs currently included in the ETF Screener has been allocated to a single “best fit” ETFdb Category (see a complete list of ETFdb Categories here). While ETFs in the same ETFdb Category generally share similar objectives and risk/return profiles, they aren’t necessarily perfect substitutes for each other. The following list shows the fund from each ETFdb Category with this highest year-to-date return as of December [...]

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Weighting Methodologies: An ETF Report Card

Michael Johnston — Tue, 27 Oct 2009 06:00:50 +0000

Advisors and individuals who favor a tactical asset allocation to investing have historically analyzed broad macroeconomic trends and statistics to identify asset classes and sectors poised deliver strong returns. In the early days of the ETF industry, this meant homing in on a certain sector or style and picking the fund that tracked that segment. But as the landscape has continued to evolve, asset class and investment style aren’t the only decisions investors face. Market capitalization weightings were once the only game in town, but in recent years alternative weighting methodologies have become more popular among investors who find flaws in a strategy that gives the most weight to the biggest companies. The vast majority of ETF assets is still in traditional market capitalization-weighted funds (and most of the largest and most popular ETFs fall into this category). But investors have embraced a number of other strategies in recent years, [...]

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Talking Revenue-Weighting, Alpha-Generating ETFs With Sean O’Hara

Michael Johnston — Wed, 16 Sep 2009 08:00:53 +0000

Sean O’Hara is the President of RevenueShares Investor Services. He recently took time out of his busy schedule to talk about weighting methodologies, alpha, and more with ETF Database. ETF Database: Market capitalization-weighted indexes are widely accepted and used among investors, but they aren’t without their flaws. Why might these cap-weighted indexes be less than ideal for benchmarking purposes? Sean O’Hara: Market cap-weighted benchmarks are price driven. There has been a lot of work done on the efficient market theory, and I think most investors would agree that over time the market is efficient, but in the short run it can be fairly inefficient. A cap-weighted index tends to push the highest price stocks to the largest weighting and the lowest price stocks to the smallest weighting. We believe that has some flaws in it. At RevenueShares, we rebalance the index on an annual basis to put the emphasis on [...]

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Revenue-Weighted ETFs: A New Twist On an Old Drink

Michael Johnston — Wed, 24 Jun 2009 09:00:01 +0000

As ETFs have become the investment vehicle of choice for an increasing number of asset managers and individual investors, the landscape continues to evolve, sometimes seemingly on a daily basis. The first ETFs to burst onto the scene generally tracked traditional asset classes and indexes. And while these “plain vanilla” funds remain among the most popular investor choices today (State Street‘s SPY, which tracks the S&P 500, is acknowledged as the first U.S. ETF, and today remains the largest and most actively-traded ETF), numerous funds tracking non-traditional assets and indexes have sprung up in recent years, expanding the reach of ETFs to nearly every corner of the investment sphere. Worth the Weight? The vast majority of ETFs on the market today track indexes constructed using traditional market capitalization-weighting methodologies. While market capitalization-weighted indexes have many advantages and are widely accepted and understood by investors, there are some drawbacks that have opened the [...]

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ETF Database » RWK

Not All Mid Cap ETFs Are Created Equal

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Are Your Cap-Weighted ETFs Leaders Or Laggards?

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Revenue Weighted ETFs Continue Impressive Run

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Beyond MDY: Three Outperforming Mid Cap ETFs

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Best Performing ETFs Of 2009

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Weighting Methodologies: An ETF Report Card

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Talking Revenue-Weighting, Alpha-Generating ETFs With Sean O’Hara

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Revenue-Weighted ETFs: A New Twist On an Old Drink

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