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Energy Market Allocation Reduced As Investment Opportunities Slow

London, 26 November 2007 – SPA ETF Plc (SPA), a specialist provider of Exchange Traded Funds (ETFs), today announced the results of the latest quarterly rebalancing of the MarketGrader 40 (MG) index. The systematic 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%.

Daniel Freedman, director, SPA ETF Plc, comments: “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.”

Neil Michael, head of quantitative strategies, London & Capital, the sister company to SPA ETF, explains: “The disciplined selection process of evaluating each stock according to its company fundamentals, grouped under ‘growth’, ‘profitability’, ‘cashflow’ and ‘value’, has meant that 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.”

SPA offers institutional and retail investors access to ETFs based on the fundamentally driven indices created by US research company MarketGrader’s proven quant-based system. The MarketGrader indices are unique because of the sophisticated methodology of weighting and evaluating the stocks. Unlike standard indices, which evaluate stocks based on fixed parameters, MarketGrader uses 24 quantitative filters to carry out a fundamental evaluation of more than 5,700 North American stocks. Each MarketGrader index periodically adjusts its holdings to ensure an equal weighting for, and an optimal grading of, all stocks. This advanced process helps to avoid the pricing anomalies that arise from traditional market-cap weighted indices.


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Renske Law/ Julia Royle, Cre8 Results Limited
Tel: +44 (0)20 7734 9199

About SPA ETF Plc

SPA ETF Plc, headquartered in London, is an innovative, independent specialist provider of Exchange Traded Funds (ETFs) established to offer global private and institutional investors access to ETFs tracking fundamental US focused indices.

SPA’s ETFs will track the performance of stock indices created by the research provider MarketGrader’s quant-based methodology. It uses 24 quantitative filters within four main areas (growth, value, profitability and cash flow) to carry out a fundamental evaluation of more than 5,700 North American stocks. Each index periodically adjusts its holdings to ensure an equal weighting for all stocks and to ensure holdings are of optimal grade.

SPA ETF Plc is supported by London & Capital, an independent firm of investment advisors and fund managers, with services including investment expertise, research, quantitative analysis and regulatory authorisations. London & Capital has USD3.0 billion assets under management.

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