Spa ETF International has been established as a specialist provider of exchange-traded funds, with plans to launch a family of ETFs based on a fundamental quantitative methodology that con
Spa ETF International has been established as a specialist provider of exchange-traded funds, with plans to launch a family of ETFs based on a fundamental quantitative methodology that consistently outperforms major US market indices.
The new firm will use research provider MarketGrader’s quant-based approach to introduce over the next 12 months a complete suite of ETFs covering North American-listed companies, aimed at private and institutional investors in Europe.
Spa ETF International aims to build upon the success of the MarketGrader 40 Index, which will be represented in the initial range of funds. Since the launch of the index in January 2003, it has achieved annualised returns of 29.75 per cent, outperforming the S&P 500 by 17.8 per cent.
‘It has been estimated that 85 per cent of fund managers in Europe underperform US indices such as the S&P 500,’ says Spa ETF International director Daniel Freedman. ‘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, which uses 24 quantitative filters covering four main areas (growth, value, profitability and cash flow) to carry out a fundamental evaluation of more than 5,600 North American stocks. Each 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 which has USD3bn in assets under management and where Freedman is a managing director, will support Spa ETF International with services including investment expertise, research, quantitative analysis and regulatory authorisations.
‘The rise of the fundamental index is causing a market shift,’ says Neil Michael, head of quantitative strategies at London & Capital. ‘European investors are now looking beyond the traditional market cap-weighted indices for superior performance.
‘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.’
