Brand value in the boardroom with launch of new branding-backed financial indices
Brand value specialist Brand Finance and financial indexing company Solactive AG have partnered up to launch two financial indices that offer investors information on companies that are deemed to have strong brand value.
The launch follows evidence earlier in the year from Brand Finance that highly branded companies can outperform the stock market. Between 2007 and 2015, for example, the average return across the Standard & Poor’s 500 was 49%. But David Haigh, chief executive of Brand Finance, claims that if investors had targeted companies with strong brands, they could have generated returns “of up to 97%”.
These findings led to Brand Finance teaming up with Frankfurt-based Solactive to launch the two new financial indices: the Solactive BrandFinance European Leaders Select 30 Index and the Solactive BrandFinance European Leaders Low Risk 30 Index. Both feature 30 select brands and, according to the announcement, “serve as platforms for investors seeking to invest in companies with strong, valuable brands, high dividend yield and low volatility”.
In announcing the new indexes, Solactive’s head of research, Henning Kahre, stated that the company “understands the critical importance of brand building and how this can benefit corporations”, adding that the new indices will “give investors the opportunity to be exposed to companies deemed to have a strong brand value”.
The message that more valuable brands can be expected to generate higher profits is a boon for trademark counsel, as it gives the profile of brand valuable a boost among senior management. Further, it shows the very tangible financial benefit of effective management of intangible corporate assets.