Companies understand the importance a strong brand in order to discern themselves from market competition within their respective sectors. In order to provide a visual representation of current brands that are undervalued in today’s global markets, Brandometry has created a new infographic chart, which should look familiar to most financial advisors and investment professionals.
Similar to the famous quilt chart demonstrating the changing of the guards among asset classes each year, Brandometry’s chart depicts a similar rotation among undervalued strong brands tracked by the EQM Brand Value Index.
Each year, utilizing Tenet Partners’ proprietary Brand Power Score methodology, the Index selects the top 50 brands in terms of market timeliness and investment potential. Over the last decade, this approach has consistently beaten the market relative to the S&P 500 Index and most major U.S. indices.
The list of top ten brand performers varies each year, arguing for a diversified approach. In 2018, some of the top contributors of performance to the EQM Brand Value Index were Netflix, +85.42 percent, Mastercard, +41.63 percent, Target, +39.49 percent, and Keurig-Dr. Pepper, +36.21 percent–brand performance is for the time period held in the Index and not annual performance.
As Brandometry’s CEO Larry Medin explains, “While brand leadership varies each year, the Index has consistently identified the best brands to own and when to own them. The key is knowing when to own brands that are undervalued, and that’s what the Brand Value ETF strives to deliver for investors.”
The EQM Brand Value Index (.BVAL), powered by Refinitiv, holds U.S. large cap companies and U.S. exchange-traded ADRs $1 billion in market cap and above. The index methodology is rules-based and equally weights the top 50 companies exhibiting both a discount of brand and intangible asset value to market capitalization and a positive return on invested capital (ROIC).
To download your personal copy of the infographic “A Decade of Capturing Brand Value” visit www.Brandometry.net.
In addition, the firm published a white paper that underscores the importance of branding to not only companies and their customers, but to investors when it comes to locating potential opportunities.
The white paper, titled “Converting Brand Power into Investment Returns,” features a study developed by The Smart Cube, a global provider of research and analytics solutions. What the results revealed is that branding can serve as one of the primary indicators of value that an investor can utilize when it comes to screening for profitable investment alternatives–an intangible asset that can communicate value in ways that fundamentals like price-to-earnings ratios or revenue cannot specifically quantify.
Main findings of the white paper reveal that the EQM Brand Value Index exhibits the following:
- Generates non-traditional alpha over the S&P 500 and provides exposure to multiple sectors (not just consumer-centric companies).
- Identifies companies with strong balance sheets that generate superior market returns.
- Is less volatile and has lower drawdown risk than the S&P 500.
- Performs strongly on environmental, social and governance (ESG) parameters.
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