London-based exchange traded fund (ETF) provider SPA ETF launched six new ETFs on the American Stock Exchange (Amex) today. The SPA ETFs use quantitative, fundamentals-based analysis to identify stocks it thinks will outperform the broader market. The new ETFs are:

  • MarketGrarder 40 (SFV)
  • MarketGrader 100 (SIH)
  • MarketGrader 200 (SNB)
  • MarketGrader Small Cap (SSK)
  • MarketGrader Mid Cap (SVD)
  • MarketGrader Large Cap (SZG)

The first three, based on MarketGrader “core” indexes are baskets on 40, 100 and 200 top-rated North American securities. The three “cap” indexes are based on the top 100 North American stocks within each market capitalization category. The MarketGrader system looks at 24 quantitative indicators, roughly divided into four buckets: growth, value, profitability and cash flow. The indexes have certain capitalization and sector restrictions to ensure that no one area dominates an index. For example, the MarketGrader 40, 100 and 200 indexes are required to have a 25% minimum position in large caps and a 25% maximum position in small caps. The expense ratio for these ETFs is a pricey 0.85%.

The MarketGrader indexes differ from other "beat-the-market" strategies in a couple of ways, says Matt Hougan for Index Universe. For one, they have a real-time track record: The indexes have been around since 2003. So far, the real-time performance has been strong: During the past three years, all six MarketGrader indexes have outperformed the S&P 500, S&P 400 and S&P 600 by a wide margin. It will be interesting to watch these ETFs as they grow.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.