Winning Quant-based MarketGrader Methodology to be Utilised by
Spa ETF International
Spa ETF International, a specialist provider of Exchange Traded Funds (ETFs), has been established to launch a family of ETFs based on a fundamental quantitative methodology that consistently outperforms major US market indices.
Spa ETF International will use research provider MarketGrader’s proven quant-based approach to introduce a complete suite of ETFs in Europe during the next 12 months. The ETFs will cover North American-listed companies.
Spa ETF International will build upon the success of the MarketGrader 40 Index. Since the launch of the MarketGrader 40 index in January 2003, it has achieved annualised returns of 29.75%, outperforming the S&P 500 by 17.8%. The initial range of ETFs will include the MarketGrader 40 index.
Daniel Freedman, director, Spa ETF International, comments: “It has been estimated that 85% of fund managers in Europe underperform US indices such as the S&P 500. We are confident that MarketGrader will continue to exceed returns from both the main US indices and the majority of active fund managers over the long term. By utilising the successful MarketGrader methodology we will be able to launch a leading range of ETFs and capture this rapidly growing market.”
The MarketGrader ETFs will track the performance of stock indices created by the MarketGrader quant-based methodology. It uses 24 quantitative filters within four main areas (growth, value, profitability and cash flow) to carry out a fundamental evaluation of more than 5,600 North American stocks. Each MarketGrader index periodically adjusts its holdings to ensure an equal weighting for all stocks and that holdings are of optimal grade.
London & Capital, an independent firm of investment advisors and fund managers, will support Spa ETF International with services including investment expertise, research, quantitative analysis and regulatory authorisations. Neil Michael, head of quantitative strategies, London & Capital, comments: “The rise of the fundamental index is causing a market shift. European investors are now looking beyond the traditional market cap-weighted indices for superior performance.”
He adds: “By evaluating the full range of North American-listed companies, MarketGrader undertakes a level of analysis near impossible for a human analyst to achieve. The Spa ETF International range of MarketGrader ETFs will respond to the increasing demand in the European market for quantitative investment strategies using fundamental index products.”