Standard & Poors®
Both RBS and RevenueShares use widely known S&P® Indexes for their stock selections.
Standard & Poor’s is known for maintaining some of the most widely followed indices of American stocks dating back to 1957.
One debate that still rages in the investment marketplace is active vs. passive management. Over time passive management like S&P® Indexes more often outperform their active management counterparts.
The S&P Indices are considered industry benchmarks for a wide range of financial products including mutual funds because of the criteria listed below. However, you cannot invest in an Index. The S&P 500® includes 500 companies with a market capitalization of $4 billion+, S&P MidCap 400® includes 400 companies with a market capitalization of $1 billion to $4.4 billion, and the S&P SmallCap 600® includes 600 companies with a market capitalization of $300 million to $1.4 billion. The charts above compare the 1, 3 and 5-year average annual returns (where applicable) for these Indices versus their respective S&P® categories. For the time periods, the resulting S&P® query identified 1,075 large cap funds, 453 mid cap funds, 634 small cap funds. For the purposes of this analysis, the following criteria was used: Domestic Mutual Funds. Returns shown include reinvested dividends and capital gains. Fees and expenses do not apply to the Indices; however, these costs are reflected in the mutual funds used in this analysis. As such, performance for the mutual funds is lower after deducting applicable fund costs.
Additional differences between active and passive management can include: investment characteristics, investment objectives, fluctuation of principal and/or return, and overall fees and expenses.
Performance data quoted represents past performance and is no guarantee of future results.
Source: SPIVA Scorecard, 2010 Year-End, Standard & Poor’s®
S&P® Criteria:
Index Additions: Screening by S&P® for inclusion to their indexes.
1. U.S. Company. Determining factors include location of the company’s operations, its corporate structure, its accounting standards and its exchange listings.
2. Market Capitalization. The market capitalization per index is reviewed from time to time to ensure consistency with market conditions. (U.S.$ Ranges: S&P 500® in excess of $4 billion, S&P MidCap 400® $1 billion to $4.4 billion, S&P SmallCap 600® $300 million to $1.4 billion).
3. Public Float. There must be public float of at least 50% which means that at least half of the company's shares must be publicly traded.
4. Financial Viability. Companies should have four consecutive quarters of positive as-reported earnings, where as-reported earnings are defined as GAAP Net Income excluding discontinued operations and extraordinary items.
5. Adequate Liquidity and Reasonable Price. The ratio of annual dollar value traded to market capitalization for the company should be 1.00 or greater. Very low stock prices can affect a stock’s liquidity.
6. Sector Representation. Companies’ industry classifications contribute to the maintenance of a sector balance that is in line with the sector composition of the universe of eligible companies within the defined market cap range.
7. Company Type. Constituents must be operating companies. Closed-end funds, holding companies, partnerships, investment vehicles and royalty trusts are not eligible. Real Estate Investment Trusts (REITs) and business development companies (BDCs) are eligible for inclusion. Continued index membership is not necessarily subject to these guidelines.
These guidelines seek to provide the transparency required and fairness needed to enable investors to replicate the index and achieve the same performance as the respective S&P® indexes.
Source: S&P Indices Fact Sheet, Standard & Poor’s®