OppenheimerFunds on Wednesday said that it is acquiring VTL Associates, LLC, the owner of the RevenueShares brand of exchange traded funds, a move that gives Oppenheimer a footprint in the fast-growing smart beta ETF segment.
Terms of the deal were not disclosed. In a statement issued by the companies earlier today, VTL said it manages $1.7 billion in assets across eight ETFs and separate accounts.
In May, VTL hired Royal Bank of Canada to find suitors for RevenueShares. Well-known RevenueShares ETFs include the RevenueShares Large Cap Fund (NYSE: RWL), RevenueShares Financials Sector Fund (NYSE: RWW) and the and the RevenueShares Ultra Dividend Fund (NYSE: RDIV). Of the six RevenueShares ETFs with long enough track records, four carry either four- or five-star ratings from Morningstar, according to the statement.
RevenueShares ETFs such as RWL and RWW weight member companies by revenue whereas RDIV, the dividend fund, holds 60 members of the S&P 900 “ranked by the average 12 month trailing dividend yield in each of the previous trailing four quarters,” according to RevenueShares.
Weighting stocks by revenue or dividends “is designed to lower exposure to overvalued companies, while maintaining diversification by investing in all of the stocks in the given index.
VTL has been successfully employing this strategy in ETFs since 2008,” according to the statement.
Smart or strategic beta ETFs refer to funds that blend properties of both active and passive management.
“Today there are more than 350 smart-beta ETFs available in the U.S. comprising over $230 billion in AUM, up from just 212 products and $64.8 billion in 2010,” according to PowerShares, the fourth-largest U.S. ETF issuer.
A recent study by PowerShares indicates nearly two-thirds of institutional investors plan to boost usage of smart beta ETFs over the next year, data that could explain why some asset managers could look to acquire smaller issuers of strategic beta ETFs.
“Clients have expressed interest in OppenheimerFunds expanding its array of investment capabilities,” Peter Mintzberg, head of corporate strategy and development at OppenheimerFunds, said in the statement. “We continue to look for these types of opportunities to further broaden our offering.”
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