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 strong French brands as measured by BrandZ has significantly outperformed the CAC 40 index.
While the value of shares in the BrandZ France portfolio has risen 2.9 percent in the 10 months to October 2018, the CAC 40 has actually declined, by 0.2 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 tend not to fall as far, and when they bounce back, they usually bounce higher.
Two investors each buying shares worth €1,000 in December last year – one putting their money in an index tracker and another backing the companies behind the BrandZ strong brands portfolio – would not both have posted gains had they cashed in this October. The tracker fund investor would have lost €2, while the BrandZ investor would have made €29.
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.