MarketGrader 40 Index


Base Date:

December 31, 1997

No. of Components:

40

Minimum Market Cap:

USD $100 million

Minimum Daily Avg. Liquidity:

USD $2 million

Sector Limit:

30% (12 companies)

Industry Limit:

15% (6 companies)

Geographic Exposure:

United States

Rebalance Frequency:

Quarterly

Underlying Universe:

Companies domiciled in the North America, excluding Canada, listed in U.S. exchanges


Methodology


Selection
All index constituents are selected on the basis of their fundamental strength as measured by MarketGrader’s overall grade. Built on a scale between 0 and 100, our Overall Grade is based on our 24 fundamental indicators, which are broken down into four analytical categories: Growth, Value, Profitability and Cash Flow. All of our indicators and our overall grades are calculated daily for all companies under coverage.


Equal Weighting
All index constituents are equally weighted every time the index is rebalanced. No weight modifications or adjustments are made to the portfolio between rebalance periods.


Liquidity
All index constituents must have a minimum total market cap of USD $100 million and a minimum 3-month daily traded value of USD $2 million. At least 25% of all index components (10 companies) must have a total market cap of at least USD $10 billion. No more than 25% of all index components may have a total market cap below $1 billion.


Diversification
No more than 30% of the index (12 companies) may belong to the same economic sector while no more than 15% of the index (six companies) may belong to the same industry.


Rebalance Discipline
The index is rebalanced quarterly, on the third Friday of February, May, August and November.

Strategy

MarketGrader’s first index, launched in 2003, MG40 was originally designed as a model portfolio of the 40 highest graded stocks in our research coverage universe when our service was first launched. At the time of its creation, MG40 was unique and truly revolutionary in its combination of a fundamental selection process of its constituents and portfolio construction rules that ensured ample underlying liquidity and sector and industry caps that ensured portfolio diversification with an unemotional, automated, fully transparent rebalance methodology. MG40 became the first of our family of equally-weighted indexes.




Licensing Opportunities

156 Almeria Ave, Suite 201
Coral Gables, Florida 33134 USA
Phone (888) 529-1767
Licensing@marketgrader.com






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