SHARE PRICE: Strong brands beat the market
The value of investing in brand building is not an abstract concept; it shows up in the business bottom line. In fact, a portfolio of the Top 50 UK brands in our ranking this year has not just outpaced the FTSE 100, it’s thrashed it.
While the value of shares in the BrandZ UK portfolio has risen 9.3 percent in the eight months to July 2018, the FTSE 100 has grown by just 1.1 percent over the same period. Both have ridden similar highs and lows, but as the graph below shows, when external factors put pressure on all businesses, those with the strongest brands don’t fall as far, and they bounce back more readily.
Two investors each buying shares worth £1,000 in November last year – one putting their money in an index tracker and another backing the companies behind the BrandZ Top 50 brands – would both have posted gains had they cashed in this July. But while the tracker fund would have generated an extra £11, the BrandZ investor would have made an additional £82, with a total gain of £93.
This result echoes what we see globally; a portfolio of BrandZ leading brands outperforms leading market indices. Over 11 years of tracking the strongest global brands, a BrandZ portfolio has gained 172.1 percent in share price value, significantly outperforming both the S&P 500 and the MSCI World Index.