SPA ETF Plc has released the results of the latest quarterly rebalancing of the MarketGrader 40 index.
The overhaul of the index’s portfolio, based on the objective review of 24 fundamental factors from the US’ 5,700 publicly-traded companies found fundamental value in selected financial stocks, following the sub-prime mortgage crisis. Conversely, in this quarter’s rebalancing, MarketGrader 40 has reduced its exposure to the energy market by 8%, in a marked contrast to previous quarters where stocks in this sector received the maximum allocation of 30%.
“The SPA MarketGrader 40’s portfolio rebalancing provided some interesting insights into the US market. MarketGrader applies its methodology without being hindered by human emotion. Despite negative sentiment around financials, MarketGrader has increased its allocation to financial institutions from 10% to 18%, as it assessed a number of stocks as being undervalued,” says Daniel Freedman, director, SPA ETF Plc.
“MarketGrader has been able to identify selective stocks that have not been affected by the credit crisis, such as those in insurance. In order to accommodate the increased weighting in the finance sector, it has reduced the weighting of the energy sector, which offers less fundamental attractiveness,” adds Neil Michael, head of quantitative strategies, London & Capital, the sister company to SPA ETF.