CMC Markets launches share baskets based on share price behaviour

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CMC Markets PLC (LON:CMCX) has launched a set of ‘signature’ share baskets to extend its range of index products.

These baskets are a CFD product that groups together stocks that share common price behaviour, rather than an industry sector, geography or size.

The first set of these signature baskets, which was designed in conjunction with industry experts Julius de Kempenaer and Trevor Neil of RRG Research, 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 that are seen to be underperforming, backtesting has shown that the strategy historically outperformed the wider market.

For example, the new UK 350 RRG Momentum+ basket from CMC 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.

It has delivered a return of 88.9% over the 12 months to 4 March 2021, versus the 6.8% from the FTSE 100.

As well as the UK, the seven RRG Momentum+ share baskets on offer are drawn from major benchmark equity indices in the USA, Australia, Germany and Hong Kong. 

Customers’ early response to these baskets has been encouraging, said Ed Gotham, head of growth at CMC Markets.

De Kempenaer and Neil are market professionals with collectively more than 75 years of trading experience, including the last 16 years spent developing the concept of relative rotation graphs, which are widely used by traders and investors and are available on market data platforms including Bloomberg terminals and Refinitiv Eikon.

De Kempenaer said: “Products like this are designed to offer another layer of flexibility and recognize 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.”

Past performance is not a reliable indicator of future results, CMC Markets noted.

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