Editor's note: This is Part 2 or Rebalancing Your ETF Portfolio, by Paul Weisbruch of Street One Financial. Here is Part 1.

RevenueShares Large Cap ( RWL) is based on the S&P 500 like the SPDR Trust ( SPY), iShares S&P 500 Index ( IVV) and Rydex S&P Equal Weight ( RSP).

The difference is in the weighting methodology, in which the index ranks the S&P 500 components by top-line revenue. This ETF employs a once-per-year rebalancing in December, in which those stocks whose market cap has surged far ahead of revenue growth are trimmed back, and more shares are purchased of those stocks in the index whose price to revenues are trading above the price to shares outstanding.

>>Want More ETFs? Visit Our ETF Screener Page

Similar to the RSP quarterly rebalance, employing some regular rebalance in your investment methodology seems to have benefits in terms of helping you as the investor takes profits in a systematic manner, as well as allocating additional monies to those stocks that may be languishing in your portfolio. As said earlier, market cap doesn't rebalance; it simply follows the peaks and valleys of the market, tracking the benchmarks.

At times, the general market will be overbought and at times oversold, so a straight market-cap index cannot take advantage of these situations and add outperformance because of the lack of a systematic rebalance. The trailing one-year returns of these four S&P 500-based ETFs demonstrate value was added in terms of benchmark outperformance in both RSP and RWL (up 76.07% and 60.06% respectively) vs. the benchmark-driven SPY and IVV up 49.78% and 49.64%, respectively. Net of expenses, as RWL charges 49 basis points as compared with SPY and IVV's 9 basis points, RWL has demonstrated alpha over the past trailing one-year period and since inception in February 2008.

First Trust offers its own twist on the S&P 500, available through First Trust Large Cap Core AlphaDEX ( FEX). According to the First Trust Web site, the universe of stocks selected for FEX is the S&P 500, and through a proprietary screening of growth factors such as three-, six- and 12-month month price appreciation, sales-to-price and one-year sales growth, as well as on value factors such as book-value-to price, cash-flow-to price and return on assets. The S&P 500 stocks are then assigned a score according to these factors, with those with the highest scores fill out FEX, 75% of the S&P 500 are included and the lowest-scoring 25% of the index are discarded and not part of FEX.

If you liked this article you might like

New Dividend ETF Has Unique Strategy

Fundamental Funds Topped the S&P 500

Fundamental Index Funds Look Promising

Fundamental Index Funds Look Promising

Fundamental Index Funds Beating Traditional Benchmarks

Fundamental Index Funds Beating Traditional Benchmarks