OppenheimerFunds has unveiled two new revenue-weighted ETFs on NYSE Arca that invest in emerging and developed international equities. The new funds focus exclusively on dividend-paying firms.
David Mazza Head of ETF Strategy at OppenheimerFunds.
The Oppenheimer Emerging Markets Ultra Dividend Revenue ETF (REDV US) tracks the FTSE Custom Emerging Ultra Dividend Revenue Index.
The index selects the 100 stocks from the FTSE Emerging Index that have the highest average one-year trailing dividend ratios over the past two years.
It had an expense ratio of 0.46%.
The Oppenheimer International Ultra Dividend Revenue ETF (RIDV US) tracks the FTSE Custom Developed ex US Ultra Dividend Revenue Index.
To avoid so-called dividend traps and companies with unsustainable dividends, the index first excludes the top 5% of securities by yield from each country within the FTSE Developed Ex US Index and then excludes the top 5% of securities based on dividend payout ratio from each sector. It then selects 200 stocks with the highest average one-year trailing dividend ratios over the past two years from the remaining constituents.
It has an expense ratio of 0.42%.
Both new funds weight constituents by top-line revenue with a cap of 5% on individual companies and a restriction on country weights deviating more than 10% from their weights in the parent index.
A revenue-weighted approach may offer benefits over alternative weighting schemes as revenue is less open to management manipulation compared to, say, earnings, and is also less influenced by behavioural trends in the stock market.
The new launches bring the number of funds within OppenheimerFunds’ revenue-weighted ETF suite to 12.
David Mazza, Head of ETF Investment Strategy at OppenheimerFunds, noted, “When it comes to dividend investing, particularly in the current environment, it may not make sense for investors to limit themselves to the US market, despite its size. Furthermore, investors that focus exclusively on the yield factor style as a core holding may find themselves with a concentration in overvalued stocks. With our expanded offering of the Ultra Dividend Revenue suite, investors are now able to create a high-dividend, value-oriented global portfolio to meet their income needs.”