Share baskets are the new trend among retail brokers who address investors’ needs to gain exposure to equity markets in a number of sectors while reducing the risk inherent to owning one single stock.
Saxo Bank has now introduced its e-commerce basket as the sector is in a strong momentum amid strong investor demand and positive Q4 earnings surprises. This year, Saxo’s e-commerce basket is up 14.8% year-to-date as they remain the big winners of the pandemic and lockdowns across every major economy: it forced consumers to buy goods online lifting growth rates and profitability.
The trading company’s equity theme baskets try to “strike a balance between geographical diversification, balanced in terms of subcategories within the overall theme, and select the companies mostly on market cap without any regards to valuation metrics”, said Peter Garnry, Head of Equity Strategy at Saxo.
“These baskets are inspirational lists and not our investment recommendations. Investors should do their own due diligence of these stocks and make their own assessments of whether the theme and the individual stocks make sense in their respective portfolios, he added.
The e-commerce theme has 40 stocks and it excludes travel and leisure e-commerce stocks, which will come in a separate travel and leisure theme later this year. The list represents almost $4trn in market value and the group of companies have an average revenue growth rate of 40% the past year, as per the announcement.
“Our e-commerce basket is up 14.8% year-to-date as of yesterday’s close and is thus the best performing theme in our universe of themes and the basket is up 700% over the past five years outperforming the MSCI World Index by a wide margin”, Garnry continued, adding that equity valuations are high on e-commerce stocks as the basted is valued at 79 times 12-month forward earnings which is around four times the global equity market.
A number of multiasset trading platforms have launched their own share baskets, including CMC Markets’s recent “work from home” basket which was introduced in the course of the pandemic as well.
