OGIG Index. Portfolio Driven by Structural Growth

September 15, 2021

Internet & E-commerce

Growth driven by structural shifts in economic activity brought on by technological advances and innovation is less sensitive to economic cyclicality.

Companies driving innovation may be a good source of long-term growth for investors. Their impact on structural change is reflected in their revenue growth metrics, a primary indicator of value creation.

The internet technology and e-commerce companies in the OGIG Index portfolio have experienced accelerating revenue growth.

Source: Bloomberg Finance L.P. data as of 6/30/2021. Past performance does not guarantee future results. The referenced index is shown for general market comparisons and is not meant to represent the O’Shares Funds. Investors cannot directly invest in an index.
Want performance? Revenue growth could be the key.

Revenue growth may be the best indicator of a company’s ability to create value for investors. It should come as no surprise that stock price is inextricably linked to sales growth. Faster growing companies should outperform slower growing companies, all things equal. What may come as a surprise is the degree of outperformance generated by the fastest growing companies.

By segmenting global tech stocks in quartiles based on 3-year revenue growth, the impact becomes clear. Global technology stocks in the 1st quartile by revenue growth outperformed those in the 4th quartile by over 40% on average over last 3 years ending 6/30/2021.

Source: Bloomberg Finance L.P. data as of 6/30/2021. Global technology stocks represented by S&P Global Information Technology Index. Past performance does not guarantee future results. The referenced index is shown for general market comparisons and is not meant to represent the O’Shares Funds. Investors cannot directly invest in an index.
Definitions:

OGIG Index: The O’Shares Global Internet Giants Index (Ticker: OGIGX) is a rules-based index intended to give investors a means of tracking stocks exhibiting quality and growth characteristics in the internet technology and e-commerce business segments and pass screens for gross margin and cash burn sustainability.
Nasdaq 100 Index: The NASDAQ-100 is a modified capitalization-weighted index of the 100 largest domestic and most active non-financial domestic and international issues listed on the NASDAQ. No security can have more than a 24% weighting. The index was developed with a base value of 125 as of February 1, 1985. Prior to December 21, 1998 the Nasdaq 100 was a cap-weighted index.
Price/Sales Ratio: The price-to-sales ratio is a valuation ratio that compares a company’s stock price to its revenues.
S&P Global 1200 Information Technology Index: The S&P Global 1200 Information Technology index consists of all members of the S&P Global 1200 that are classified within the GICS® information technology sector.
Revenue Growth: Trailing 12 months
1st Quartile: Contains the top 25% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth. 2nd Quartile: Contains the top 25%-50% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth.
3rd Quartile: Contains the top 50%-75% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth
4th Quartile: Contains the bottom 25% of companies in the S&P Global 1200 Information Technology Index based on average 3-year revenue growth.

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