Revenue Shares Financial Sector ETF (RWW) is a financial ETF that is weighted based on company revenues, not the usual market capitalization. This subtle difference has created an ETF that has substantially outperformed the S&P Financial ETF (XLF) since its inception in Oct 2008 – even though both hold the same stocks just different allocations.
Revenue Shares Financial Sector favors financial stocks that represent the largest revenue generators in the sector, regardless of the sub-class or market capitalization. This focus leads to an interesting portfolio of large financial stalwarts. The weighting concentrates the portfolio with 85 stocks, but the top six positions comprise 41% of assets and the top 11 comprise 60% of assets. Below is the latest portfolio of the top six stocks:
Berkshire Hathaway 13.33%
JPMorgan Chase 7.29%
Bank of America 6.35%
Wells Fargo & Co 6.16%
MetLife Inc 4.87%
American Insurance Group 4.61%
Rounding out the top 11 positions, Prudential Financial (PRU), Goldman Sachs Group (GS), Morgan Stanley (MS), Allstate (ALL), and American Express (AXP) each comprise between 2% and 3% of assets.
According to Morningstar, a $10,000 investment in 2008 would be worth almost $27,000 today compared to $21,000 for a similar investment in S&P Financial ETF XLF.
