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Listed on the NYSE Arca, the fund is designed to capture the capital appreciation benefits of revenue-producing companies while offering income-seeking investors a higher-than-average dividend yield.
The fund is linked to the proprietary RevenueShares Ultra Dividend Index.
This index comprises the 60 highest dividend-yielding constituents of the S&P 900 (the S&P 900 combines the constituent stocks of the US large-cap S&P 500 and mid-cap S&P 400 indices) based on average quarterly yield over the previous 12 months.
Constituents are weighted by top-line company revenue, subject to certain asset diversification requirements and a maximum 5% per company weighting. It currently has a yield of 4.92% (as of September 30, 2013).
By applying a revenue-based weighting methodology, the index reduces exposure to overvalued companies that are inflated by the market, and accentuates exposure to undervalued stocks prior to revenues being fully reflected in share prices.
On a sector basis, utilities, telecom services and consumer staples are the largest sector weights relative to the S&P 900. Information technology, financials, and consumer discretionary are the largest underweight positions. At the individual stock level, major holdings include Lockheed Martin Corp, AT&T Inc, Duke Energy Corp, ConocoPhillips and Exelon Corp.
Commenting on the launch, Vince Lowry, CEO of RevenueShares, said: “Dividends have been a reliable source of income in today’s low interest rate environment. The RevenueShares Ultra Dividend Fund strives to invest in the highest yielding stocks with weighting preference given to the strongest revenue producers.”
He added: “Research from VTL Associates, our parent company, found that a revenue-weighted dividend index may both offer a higher yield and potentially outperform the S&P 500 Index over time.”
The new fund has a net expense ratio of 0.49%.
Launched in 2008, RevenueShares now sponsors a total of seven ETFs. This latest fund is the first to be unveiled since RevenueShares’ parent, VTL Associates, received a capital injection from Suzhou Industrial Park Kaida Venture Capital, a Chinese venture capital firm.
The existing funds are as follows:
RevenueShares Large Cap ETF (RWL)
RevenueShares Mid Cap ETF (RWK)
RevenueShares Small Cap ETF (RWJ)
RevenueShares Financials Sector ETF (RWW)
RevenueShares ADR ETF (RTR)
RevenueShares Navellier Overall A-100 ETF (RWV)