Contracts for difference (CFD) provider CMC Markets has again extended its range of unique index products with the launch of signature share baskets.
Designed in conjunction with industry experts, signature baskets are constructed by applying complex investment methodologies to highlight constituents which share common price behaviour, rather than just focusing on industry sector, geography or size.
The first set of these signature baskets are based on Relative Rotation Graphs, which identify those stocks which are exhibiting positive momentum when compared to their benchmark indices. By purposely avoiding stocks which are seen to be underperforming, back testing has shown that the strategy historically outperformed the wider market.
Ed Gotham, Head of Growth at CMC Markets, says: “We have developed these unique signature share baskets in conjunction with recognised market experts to allow our clients to follow a specific trading methodology. We know they are always keen to explore new opportunities and the early response to these baskets, designed to focus on strong relative momentum stocks from a range of equity indices, has already been encouraging.”
Designed in conjunction with Julius de Kempenaer and Trevor Neil, these market professionals collectively have more than 75 years of trading experience and spent the last 16 years developing the concept of Relative Rotation Graphs. This analysis is now available on a range of leading market data platforms including Bloomberg terminals and REFINITIV Eikon, and is also widely used by many investors.
Julius de Kempenaer of RRG Research says: “Products like this are designed to offer another layer of flexibility and recognise the increasingly sophisticated needs of CMC’s clients. They understand that investment professionals have no shortage of portfolio methodologies at their disposal, so this addition means we are able to provide yet another genuine innovation for those using CMC’s trading platform.”
The RRG portfolio methodology looks to give traders exposure to those assets exhibiting strong relative momentum price movements versus their benchmark. For example, CMC’s UK 350 RRG Momentum+ basket captures positive momentum from a selection of the largest UK stocks, creating an equally weighted portfolio of the 10 most promising prospects, with the basket rebalanced quarterly.
Over the 12 months to 4 March 2021, the UK 350 RRG Momentum+ basket delivered a return of 88.92 per cent, versus the UK100 which returned 6.79 per cent. Past performance is not a reliable indicator of future results.
The seven RRG Momentum+ share baskets on offer are drawn from major benchmark equity indices in the USA, Australia, Germany, Hong Kong and the United Kingdom.
A range of 28 unique share baskets are now offered by CMC Markets, giving clients the opportunity to gain diversified exposure to an industry with a single trade.