Reverse Cap Weighted U.S. Large Cap ETF (RVRS)
If smaller companies tend to have higher returns over time, why do stocks’ indices tilt toward larger companies?
That’s the question that nagged Phil Bak, founder & CEO of Exponential ETFs, for a long time. His analysis of the data showed that bigger companies don’t go in one direction forever. Mean reversion exists in the market. From GE to Sears, old companies fall, and new companies arise to take their place.
RVRS targets these new companies by giving them the biggest weighting in the fund. The smallest companies in the S&P 500 get the biggest weights and the largest companies get the smallest weights.
When you reverse the cap, you systematically buy low and sell high; it lets you exploit mean reversion and exploit the gap between large cap and midcap, he says.
WisdomTree CBOE S&P 500 PutWrite Strategy Fund (PUTW)
The nearly $240 million PUTW is a product that tracks the CBOE S&P 500 Put-Write Index. The data show that writing puts has been more lucrative than a covered-call strategy, even though the two should be equal based on options theory.
Now may be a good time to consider an option-writing strategy as market volatility rises. Incorporating a put-write strategy into your portfolio may enhance returns while reducing the volatility of your portfolio.
The problem with market timing is missing the best days. If you had missed just the five best days over the past 20 years, your returns would have been cut in half, explains Dan Muzzarelli, VP of institutional ETF business development at Franklin Templeton.
That’s why staying invested and staying the course is the most important thing you can do for your portfolio. FLQL, a $464 million multifactor U.S. large-cap ETF that weights stocks based on quality, value, momentum and low volatility, helps you stay invested.
It has 15% lower average risk than the investment universe.
Innovation isn’t limited to just technology companies. KLDW is an innovation fund, but one that focuses on innovation across all sectors and geographies.
Highly innovative companies tend to outperform, and the best way to measure innovation is by digging deep into expense ratios and finding those companies that are spending big on R&D and advertising (as a percentage of sales).
The $126 million KLDW does that, and then equal-weights the stocks of companies it finds that have a big stock of “knowledge capital.”
Cheap and easy commodity exposure is what COMB aims to deliver. Compared with the average 0.72% expense ratio of the typical broad commodity ETF, COMB’s 0.25% fee looks downright cheap.
The $55 million ETF is also relatively hassle-free. Other broad commodity products are often structured as partnerships—which distribute complicated K-1s (a headache at tax time)—or ETNs, which have credit risk.
COMB does away with all that. It also tracks the Bloomberg Commodity Index, a basket of 21 commodities with a 33% sector cap. Gold, natural gas and corn are the current top holdings.