Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary
Research > ETFs > ETF / ETP Commentary > 

Revenue Weighting Has Relevance

BY | ETF Database
07/13/2026 | 19 VIEWS
  • Related Symbols
  • RWL
Major equity indexes, including the S&P 500, continue hovering around all-time highs. If advisors and investors are going to quibble about anything, though, it’s that the cap-weighted versions of those gauges aren’t as diverse as they once were. Indeed, concentration risk is palpable. Just look at the S&P 500, where the top five holdings combine for about 26% of the index’s weight. Fortunately, there are other ways to approach the S&P 500, including the often overlooked revenue weighting methodology, accessible via the Invesco S&P 500 Revenue ETF (RWL A-).The $9.44 billion RWL, which turned 18 years old in February, tracks the S&P 500® Revenue-Weighted Index. As its name implies, that index weighs components by the revenue they earn. Its approach is highly relevant today, because when the index rebalances, it caps members’ weights at 5%. That diminishes some of the concentration risk found with the cap-weighted S&P 500.A Good Time to Consider RWLRWL and the revenue weighting methodology may not get the kudos they deserve, because the strategy works over the long-term and those benefits extend beyond large-caps. “The S&P 500 Revenue-Weighted Index has outperformed the S&P 500 as well as the S&P 500 Equal Weight Index across both short- and long-term periods. This trend extends to mid- and small-cap equities; the S&P MidCap 400 Revenue-Weighted Index and S&P SmallCap 600 Revenue-Weighted Index have also outperformed their respective equal- and market-cap-weighted benchmarks,” noted Wenli Bill Hao of S&P Dow Jones Indices. For long-term investors, RWL offers another source of allure. It doesn’t just have the potential to beat the cap-weighted S&P 500. It has a knack for being the better risk-adjusted bet. “[The] revenue-weighted indices also showed superior risk-adjusted performance compared to their equal- and market-cap-weighted counterparts, across both short- and long-term horizons,” according to Hao. Plus, from a valuation perspective, the cost of admission to the ETF is attractive relative to cap-weighted equivalents. “The S&P 500 Revenue-Weighted Index was trading at lower valuation ratios compared to both the S&P 500 and the S&P 500 Equal Weight Index. This trend has also been observed historically over the long term… Additionally, the mid-cap and small-cap revenue-weighted versions consistently demonstrated lower price multiples relative to their respective benchmarks,” said Hao. Indeed, RWL leans into value sectors, as healthcare and financial services combine for about 35% of the ETF’s roster, compared to 21.1% in a cap-weighted S&P 500 ETF. For more news, information, and analysis, visit the Innovative ETFs Content Hub.

More Commentary

SpaceX & Beyond: A New ETF for the Space Economy
BY | ETF Database
5:21 am ET 07/14/26 | 15 VIEWS
Small-Caps Offer Rare Value as Sector Gaps Narrow
BY | ETF Database
7:27 am ET 07/14/26 | 3 VIEWS
Small-Caps Extending Bullish Ways? Play It Safe With OUSM
BY | ETF Database
5:42 am ET 07/14/26 | 14 VIEWS
View more Commentary

Search Commentary

Enter Keyword(s)
Filter Results

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.