Since the inception of MarketGrader’s first indexes in 2003, our sister company has ventured to apply innovative, independent thinking and processes to create better equity indexes. At MarketGrader Capital, our aim is to capture the greater capital appreciation potential offered by MarketGrader’s time-tested, rigorous fundamental methodology that focuses on companies’ financial health and how good they are at creating economic value.
Investors do not benefit from owning poorly managed companies or from buying at overly expensive prices. MarketGrader’s fundamental methodology and index selection parameters weed out low quality and/or pricey stocks that traditional indexes include. Regular rebalancing ensures they keep the best and part with the rest.
Traditional market capitalization weighted indexes suffer from excessive exposure to the largest and most expensive companies. MarketGrader seeks a more diversified approach free of such bias through its proprietary screens and equal weighting that allows each component to contribute equally to total index performance.
Equal weighting of index components ensures each company has the chance to contribute equally to overall performance. By not overexposing investors to the largest and potentially most expensive components as traditional capitalization weighted indexes do, our belief is that returns can be enhanced over market cycles.
Indexes and passive investment products should have complete transparency. MarketGrader provides clear explanations of all its fundamental indicators, overall grades and the determination for a company’s inclusion in any of its indexes.
MarketGrader’s systematic fundamentals-focused index construction has been proven by the persistent outperformance of its indexes versus traditional and fundamental peers over the long-term.