David Dierking Blog | This Week’s ETF Launches: The Dow 30 and Russell 1000 Get Alternative Weighting Strategies | Talkmarkets

David Dierking is a writer focusing primarily on ETFs, dividend income strategies and retirement planning.

He is a current contributor for Seeking Alpha. In the past, he has contributed to Motley Fool, ETF Trends and Investopedia. He was also included in the panel for ... more

This Week’s ETF Launches: The Dow 30 and Russell 1000 Get Alternative Weighting Strategies

Date: Thursday, August 17, 2017 3:33 AM EST

Many ETFs use the popular market-cap method of weighting components within the fund, with the S&P 500 being the most well-known example. Lately, fund providers have been launching new products that use alternative methods of weighting their portfolios. Two new ETFs debut this week that do just that.

This week’s new funds come from major ETF players: BlackRock and First Trust.

Ticker Name Issuer Launch Date ETFdb.com Category Expense Ratio
AMCA iShares Russell 1000 Pure U.S. Revenue ETF iShares 08/08/2017 Large Cap Blend Equities 0.15%
EDOW First Trust Dow 30 Equal Weight ETF First Trust 08/08/2017 Large Cap Blend Equities 0.50%

For a list of all new ETF launches, take a look at our ETF Launch Center.

New iShares ETF Targets Large-Caps That Do Most of Their Business in the U.S.

Oppenheimer is perhaps the largest provider of revenue-weighted ETFs, managing roughly $2 billion in assets across 10 different funds, including three that were opened earlier this year. BlackRock is joining the revenue-weighting game this week by launching the iShares Russell 1000 Pure U.S. Revenue ETF (AMCA n/a).

The revenue-weighting strategy has gained recognition as a more conservative way of investing in large caps. Because it focuses solely on the sales generated by a company, it takes price, and by extension, valuation concerns out of the equation. A company such as Tesla (TSLA), for example, has a nearly $60 billion market cap, largely on the strength of its share price, despite relatively limited sales and negative earnings. A revenue-weighted fund would minimize any position in this riskier stock.

This ETF is indexed to the Russell 1000 Pure Domestic Exposure Index, a benchmark that includes those components from the large-cap Russell 1000 that derives at least 90% of its revenue from the United States. Any component that subsequently falls below 85% domestic revenue gets dropped from the index. At present, the fund’s top sectors include financials (23%), consumer discretionary (16%), healthcare (10%), utilities (10%) and real estate (10%). Top individual holdings are AT&T (T), Bank of America (BAC) and Wells Fargo (WFC). The expense ratio is 0.15%.

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