Global X Funds launched a new ETF on Wednesday that offers exposure to U.S. consumption by holding 100 of the most recognizable brands in the U.S.
The Global X Iconic U.S. Brands ETF (BATS: LOGO) tracks the Accuvest Iconic U.S. Brands Index, offering exposure to the most recognizable brands in the U.S. as defined by the index provider, Accuvest Global Advisors.
Jay Jacobs, director of research at Global X, said they are excited to offer investors a way to invest in U.S. consumption via the brands they know and trust.
“A strong and recognizable brand is becoming an increasingly valuable asset to a large corporation” Jacobs said. “It’s an intuitive notion that consumers continue to return to companies and brands that they trust – one that’s continually backed up by research into consumer behavior and corporate earnings.”
LOGO’s top holdings include General Motors, Marriott, Ross Stores, Priceline, Expedia and Home Depot.
As of 2016, annual consumption in the U.S. was estimated at $12.8 trillion, representing approximately 70% of the total national GDP. U.S. consumers increasingly direct that estimated $12.8 trillion to brands that they are loyal to.
In a recent WPP survey over 80% of consumers cited brand as a key consideration in their purchases, and 56% stated brand, not price, was the most important factor. LOGO offers investors an avenue to gain exposure to those loyal consumption habits.
David Garff, president of Accuvest Global Advisors, said despite the fact that the U.S. is driven primarily by household spending, its research indicates that investors tend to be chronically underweight the brands and industries that stand to benefit from a consumer’s lifetime of spending.
“Consequently, we designed the Accuvest Iconic U.S. Brands Index to provide what we believe is a more accurate representation of the economy’s primary driver,” Garff said.
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LOGO’s underlying index includes the top 100 companies according to the Iconic Brands Score, which represents the highest ranking brands from a comprehensive analysis of consumption-focused industries.
The Iconic Brands Strength Score then rewards the companies in the top 100 with the highest revenue growth and absolute cash flow generation with a greater weighting in the Index.
The 25 companies from the Tier 1 sub-industries (core to the consumption theme) with the highest Iconic Brands Strength Score receive 50% of the total index exposure, with the remaining 75 constituents comprising the rest. LOGO is Global X’s fourth ETF in its suite of Thematic – People.
For more information on new fund products, visit our new ETFs category.