London & Capital, a boutique, UK-based asset manager, today announced it has expanded investor access to MarketGrader, one of the first merit-based equity indices available in the UK, via a global licensing deal. According to the agreement, North American and Latin American clients will now be able to take advantage of the outstanding returns of this rules-based, quant-driven index, currently offered as a basket of 40 North American stocks. The agreement comes as London & Capital prepares to launch a family of investment products based upon MarketGrader.
Ashok Shah, London & Capitalâs Chief Investment Officer, comments: âMarketGrader does more than follow the market. Unlike standard indices, it rebalances every quarter to ensure the changing circumstances of companies are constantly considered. Using quantitative filters based around key variables, this unique product introduces an âactively-managedâ quality to an otherwise passive competitive landscape.â
London & Capital began offering clients in Europe, Asia and Middle East/Africa exclusive access to MarketGrader in early 2005. The computer-generated product is entirely quant driven, and re-evaluates more than 5,700 US equities every quarter and cherry picks a basket of 40 stocks, using quantitative filters based around four key variables (growth, value, profit and cash flow). During Q1 2007, London & Capital will launch an extended suite of MarketGrader products, including the introduction of MarketGrader 100 and 300. The new products will be launched as Exchange Traded Funds (ETFs), while MarketGrader 40 will also be offered as an ETF.
Through MarketGrader, all companies are given a short-term grade between zero and 100, based upon an evaluation of key parameters. Unlike standard indices, which evaluate stocks based on fixed parameters such as market capitalisation, MarketGrader uses algorithms to apply four quantitative filters (growth, value, profit and cash flow) to analyse more than 5,700 North American stocks and adjust its holdings accordingly. The index, rebalanced quarterly in line with the submission of company results, is entirely computer driven and free from human intervention.
London & Capital, which has USD2 billion under management, has offered institutional clients access to the MarketGrader Index via a European medium-term Note since February 2005. The company launched a Fund in November 2005, opening up the index to high net worth investors.