Oppenheimer moves into smart beta ETFs with RevenueShares acquisition

Sep 18th, 2015 | By | Category: Equities

Oppenheimer Funds, the global asset manager, has made a move into the growing smart beta space with the announcement of an agreement to acquire VTL Associates, known for its RevenueShares range of exchange-traded funds.

Oppenheimer makes move into smart beta with RevenueShares acquisition

Art Steinmetz, Chairman, CEO and President of Oppenheimer Funds, and Vince Lowry, Founder of VTL Associates.

The acquisition highlights the growing importance of smart beta investing and the advantages such strategies potentially offer over traditional active management.

Smart beta ETFs have gathered considerable assets by providing transparent, systematic and low-cost exposure to factors that many active managers have historically generated excess returns from, such as value, quality or momentum.

“Investors are looking to active managers for innovative solutions to add to their overall investment strategy, including products that are designed to deliver better-than-market returns with full transparency of their investment process,” said Art Steinmetz, Chairman, President and CEO of Oppenheimer Funds.

Peter Mintzberg, Head of Corporate Strategy and Development at Oppenheimer Funds, added: “Clients have expressed interest in Oppenheimer Funds expanding its array of investment capabilities.”

VTL manages $1.7 billion for investors across eight ETFs and its separate accounts. The RevenueShares range of funds use a proprietary methodology to screen and weight stocks in each ETF according to various factors, such as revenue or dividends, instead of by market capitalisation. According to VTL, this practice is designed to lower exposure to overvalued companies while maintaining diversification by investing in all of the stocks in the given index.

“Our firm has grown by serving the needs of investors seeking above-market returns delivered through a suite of custom index products and institutional advisory services,” said Vince Lowry, Founder of VTL.

The eight ETFs in the RevenueShares range provide exposure to various market capitalisations across the US market, global growth stocks, US-listed international companies (ADRs), US financials, and high-yielding US companies. The common denominator across the range is the use of a fundamentally weighted methodology which allocates to constituents by revenue as opposed to by market capitalisation. This is in keeping with one of the key premises of smart beta investing: namely that severing the link between market capitalisation and constituent weighting leads to improved diversification and risk-adjusted returns over the long-term.

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