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Exponential ETFs launches Reverse Cap Weighted US ETF


Exponential ETFs has launched the Reverse Cap Weighted US ETF (RVRS) which offers exposure to the S&P 500 stocks weighted by the inverse of their relative market capitalisation.

The strategy brings the weighted average market capitalisation of the index down from USD162 billion to USD16 billion, while using the exact same stocks.
The RVRS portfolio is weighted based on a proprietary methodology. The rules-based, passive fund tracks the Reverse Cap Weighted US Large Cap Index comprised of all 500 publicly-traded companies in the S&P 500. However, contrary to most cap-weighted funds that skew their portfolio weightings in favor of the larger companies, RVRS offers investors exposure to the same US large-cap equities, but instead is overweight the smaller companies of the S&P 500, which have historically performed better. The ETF has an expense ratio of 0.29 percent and trades on the CBOE Exchange.
“Market capitalisation weighting exposes investors to a concentrated portfolio and an extreme bias toward mega-capitalisation companies, which can result in returns being left on the table,” says Exponential ETFs CEO Phil Bak. “With RVRS, we’re solving this problem and providing a tool for investors to balance out their exposure within their large cap US allocation.”
RVRS comes on the heels of the firm’s recent successes, including the American Customer Satisfaction Core Alpha ETF (CBOE: ACSI), which has amassed USD40.8 million in assets under management, as of the quarter-ended 30 September, 2017, and was named ETF Innovation of the Year at the 2017 Fund Action Awards.
“Exponential ETFs is dedicated to providing quality instruments that allow investors to express their market outlook,” says Exponential ETFs Chief Strategist Kevin Quigg. “RVRS seeks to accomplish this by opening up a previously inaccessible market factor (size) within a space (US large capitalisation) that dominates most investors’ equity exposure.”

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