Saxo Bank and Morningstar Investment Management Europe Ltd, part of the Investment Management group of Morningstar, Inc., have announced a collaboration that expands the range of investment strategies available to Saxo Bank clients.
With the new collaboration, Saxo Bank will add a value-based investment strategy to the range of investment portfolios available through SaxoSelect. The new portfolio, named Saxo Morningstar MOAT® Portfolio, offers a cost-effective way to invest in a portfolio of 30 quality stocks based on Morningstar’s Economic MoatTM Rating methodology and valuation research, which identifies stocks undervalued by the market.
Saxo Morningstar MOAT® Portfolio is the first stock portfolio product in Europe to provide exposure to Wide and Narrow Moat rated companies as determined by Morningstar analysts. Saxo Bank clients have full visibility over each of the stocks in their portfolio and can follow their positions in real time in a fully transparent investment environment directly through the SaxoTraderGO platform.
Stocks in the portfolio are selected from 33 exchanges. Only companies which Morningstar believes have a sustainable competitive advantage will be included. These companies are in a good position to fend off competitors and earn high returns on capital for at least 20 years (Wide Moat) or at least 10 years (Narrow Moat). Stocks are then evaluated using fundamental analysis to arrive at fair value estimates and only those trading at a large discount to these estimates are included in the portfolio.
Initially invested with equal weights, the portfolio will be reviewed by Morningstar Investment Management and rebalanced by Saxo Bank if necessary at the end of each quarter. To reduce the number of stocks replaced and the associated trading costs, the portfolio only replaces stocks if an alternative can be found which offers a 25 per cent improvement in its price to fair value. The rebalancing to target weights is also subject to a buffer to minimize transaction costs.
Launched in January 2016, SaxoSelect is an automated trading and investment service that enables clients of Saxo Bank to invest in pre-selected portfolios directly from their trading platform. Alongside the Saxo Morningstar MOAT® Portfolio, SaxoSelect offers two types of Investment Portfolios: Balanced Portfolios based on iShares ETFs and Active Trading Strategies aimed at experienced investors.
Initially, the Saxo Morningstar MOAT® Portfolio will be available to SaxoSelect clients in the Nordic countries, the Netherlands, Italy and across Central and Eastern Europe.