Revenue Weighting Has Relevance

The article highlights ongoing S&P 500 strength near all-time highs but warns that the cap-weighted index is increasingly concentrated, with the top five holdings making up about 26% of weight. It argues that revenue-weighted exposure via Invesco S&P 500 Revenue ETF (RWL) may offer a more diversified alternative, with a 5% cap at rebalance that reduces concentration risk. The piece says revenue-weighted indices have historically outperformed both cap-weighted and equal-weighted benchmarks on a risk-adjusted basis, while also trading at lower valuation ratios. It notes RWL’s $9.44 billion in assets and that healthcare and financials together comprise about 35% of the fund, compared with 21.1% in a cap-weighted S&P 500 ETF. Overall, the article is a bullish case for the revenue-weighted S&P 500 approach as a long-term portfolio allocation strategy.