Reverse Cap Weighted U.S. Large Cap ETF

The Reverse Cap Weighted U.S. Large Cap ETF (Ticker: RVRS) provides exposure to the companies in the S&P 500 index. However, while traditional market cap weighted indexes such as the S&P 500 weight companies inside the index by their relative market capitalization, RVRS does the opposite, weighting companies by the inverse of their relative market cap. By investing smallest-to-biggest, the fund is tilting investment exposure to the smaller end of the market cap spectrum within the large cap space.

  • Reverse cap weighting tilts large cap exposure to the smaller end of the size spectrum. Studies have shown that while more volatile, smaller stocks can have outsized returns.1
  • Reverse cap weighting provides a less concentrated distribution of stock weightings, increasing overall diversification.
  • Reverse cap weighting results in a weighted average market cap that is both significantly lower than market cap weighted large cap funds, and significantly higher than mid cap funds. Portfolios that allocate to market cap weighted versions of large, mid and small cap now have a tool to gain exposure to a sizeable gap in their holdings.

Minding the Gap of Size Investing:

Portfolios that allocate weightings by market capitalization skew to the largest stocks. This leaves large sections of the market under-represented or not represented at all.

Reverse Cap weighting attempts to fill this gap by:

  • Lowering your portfolio’s weighted average market-cap exposure.
  • Providing more diversification with a less concentrated portfolio.
  • Avoiding the “buying high” bias by rebalancing based on current market capitalization every quarter.

The RVRS ETF can help bridge the gap between the investment exposure you think you have (large cap) and what you actually have (mega cap).

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Investment Objective

The Reverse Cap Weighted U.S. Large Cap ETF (the “Fund”) seeks to track the performance, before fees and expenses, of the Reverse Cap Weighted U.S. Large Cap Index (the “Index”).

Investment Index

The Index is a rules-based, reverse capitalization weighted index comprised of the 500 largest U.S.-listed companies as measured by their free-float market capitalization contained within the S&P 500 universe. The Index seeks to provide exposure to the U.S. large-cap market but with greater emphasis on the smaller-end of the large-cap spectrum, unlike many traditional market capitalization weighted indexes that place a greater emphasis on the largest companies in the large-cap market.

as of 07/09/2020

as of 06/30/2020

Performance

Cumulative

Annualized

The performance data quoted above represents past performance. Past performance is not a guarantee of future results. Investment return and value of the ETF shares will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance, current to the most recent month-end, call 734-882-2401. Shares are bought and sold at market price (not NAV) and are not individually redeemed from the ETF. Total Returns are calculated using the daily 4:00pm net asset value (NAV). Market returns are based on the composite closing price and do not represent the returns you would receive if you traded the shares at other times. The first trading date is typically several days after the fund inception date. Therefore, NAV is used to calculate market returns prior to the first trade date.

as of 07/09/2020

Daily Holdings

Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any security.

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Price to book – Companies use price-to-book ratio to compare a firm’s market to book value by dividing the price per share by book value per share.

Price to earnings – The price-to-earnings ratio is the ratio for valuing a company that measures its current share price relative to its per-share earnings.

Price to sales – The price-to-sales ratio is a valuation ratio that compares a company’s stock price to its revenues.

Active share – Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index.

Beta -A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market.

R Squared – R-squared is a statistical measure that represents the proportion of the variance for a dependent variable that’s explained by an independent variable or variables in a regression model.

Capture ratio – The capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped or risen.

 

An investor should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The Prospectus or summary prospectus contain this and other important information about the Fund and are available at exponentialetfs.com/acsi or by calling (800) 617-0004. Please read the prospectus or summary prospectus carefully before Investing.

Investments involve risk. Principal loss is possible. The securities of large-capitalization companies may be relatively mature compared to smaller companies and therefore subject to slower growth during times of economic expansion. The ACSI Index relies heavily on proprietary quantitative models as well as information and data supplied by third parties (Models and Data). Because the ACSI Index is composed based on such Models and Data, when such Models and Data prove to be incorrect or incomplete, the Index and Fund may not perform as expected. As with all index funds, the performance of the Fund and its Index may differ from each other for a variety of reasons. For example, the Fund incur operating expenses and portfolio transaction costs not incurred by the Indexes. In addition, the Fund may not be fully invested in the securities of the Indexes at all times or may hold securities not included in the Indexes. The Fund has the same risks as the underlying securities traded on the exchange through the day. Redemptions are limited and often commissions are charged on each trade, and ETFs may trade at a premium or discount to their net asset value. To the extent the Fund invests more heavily in particular sectors of the economy, the Funds’ performance may be more sensitive to developments that significantly affect those sectors.

RVRS is distributed by Foreside Fund Services, LLC

1. Fama, Eugene L., and French, Kenneth,” The Cross-Section of Expected Stock Returns”, Journal of Finance, pp 427-465.

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