RevenueShares has launched the RevenueShares ADR Fund ETF (NYSE Arca: RTR). It's the second exchange-traded fund introduced by the revenues-focused, index-based ETF family in the past week and may bring more competition to the international developed markets (ex-U.S.) category.B
RTR will track the RevenueShares ADR Index, another custom index designed by the ETF company to take a revenues-based slant on a major Standard & Poor's index. The rules-driven methodology re-weights the constituent securities of the S&P ADR Index according to the revenue earned by the companies in that index, subject to certain tax diversification requirements.
The resulting RevenueShares ADR Index contains the same securities as the S&P ADR Index, but in different proportions.
RTR is unique in using the S&P ADR Index as its benchmark, the first ETF to do so. While there are region-specific ETFs based on ADR indexes, there is no ETF tracking the S&P ADR index. In fact, most of the competition for RTR will be from MSCI EAFE Index-pegged, and other developed markets index ETFs, that exclude the U.S.
This group includes the $26 billion iShares MSCI EAFE Index Fund (NYSE Arca: EFA); the PowerShares FTSE RAFI Developed Markets, ex-U.S.Portfolio (NYSE Arca: PXF); and the Vanguard FTSE All-World, ex-US ETF (NYSE Arca: VEU).
RTR differentiates itself from MSCI EAFE plays like EFA by extending beyond the EAFE zone of Europe, Australasia and the Far East. RTR also adds ADRs from Canada, Mexico and South America.
RTR's most direct competition is PowerShares' PXF. PowerShares and WisdomTree are the only other ETF companies in the U.S. that offer an alternative to the standard market capitalization-based equities methodologies. PowerShares teamed with Research Affiliates to offer the PowerShares FTSE RAFI index-based ETFs, while WisdomTree has a lineup of earnings-based ETFs, but primarily covering the U.S. stock market. Its only international earnings-based fund is for the Indian stock market.
On fees, RTR comes in closer to PXF (though still cheaper) and twice as much as the broad market capitalization-based, developed market ETFs. RTR has a management fee of 60 basis points, while PXF comes in at 75 basis points. EFA charges 34 basis points and VEU 25 basis points. PowerShares recently slashed fees on FTSE RAFI ETFs to 39 basis points, but only for the domestic portfolios.
The prospectus for the new fund is here.