Index methodology

About

Rules Based Methodology of BTW50 Index

Our mission is to identify companies worthy of investment that share high growth potential and strong brand equity. We identify strong brands that maintain positive brand resonance and value not recognized in share price.

The BTW50 Index from Brandometry™ represents those top 50 companies with unrealized value in the U. S. markets per the scoring process. The Index is rules-based and equally weights its 50 constituents. Created in 2016, with a time series of data beginning on August 31, 2007, the BTW50 Index is the first financial index to employ brands as a key to identifying undervalued companies in the U.S.

Why Follow This Index?

Key Reasons

Historical results have shown that the Index identifies unrealized value in well-known brands. By measuring the Brand Value change from year to year, the Index strives to be a leading indicator of company growth.

Your clients know Brands. Give them an opportunity to talk about knowing what they own through Brand Value. The BTW50 provides you the research tool to support your investment decisions.

Qualitatively-measured assets, like brand value, are not reported in financial statements. Our index gives investors more information to make better decisions.

The Index constituents can be an effective diversifier to an investor’s portfolio. It generally has value-based attributions, but can also act like a growth portfolio. Brand Value can be a leading indicator for the investor.

The Index provides higher “Active Share Exposure” than related comparison indexes. Specifically, that means there is less overlap and more potential to outperform today’s closely followed indexes.

Why The Index Was Developed

Brand Metrics Combined with Financial Analytics – We have pioneered the use of qualitatively-measured assets in determining corporate value.

Big Data > Behavioral Economics > Increased Transparency – In today’s economy, the ability to capture, quantify and combine these heretofore hidden assets demonstrates that the time is right to link Brand Value to Corporate Value.

GAAP Accounting Misses Internally Generated Brand Value – Brand Value is a significant and heretofore unmeasured component of corporate value. We capture, quantify, and combine financial and qualitative information to determine overall corporate value.

Marketing Budgets Continue to Grow – Today’s high growth companies continue to invest at higher and higher levels in their Brand, providing what many believe to be a leading indicator of current health and future success of the company.

Why measuring Brand Value is important

How can one take advantage of the increase in these hidden assets as part of an overall investment strategy? BTW50 provides the tool for identifying Unrealized Brand Value. It is ahead of the curve — putting Brand Value on the map — helping identify investment opportunities based on metrics for both tangible + intangible value.

Financial Impact of Brand – Why you should care.

The correlation between Brand investment and Growth has been long understood by marketers, yet the financial sector has largely ignored its impact. For the first time, the power of this Index is leveraging data from both business disciplines of marketing and finance. Marketing measurement and financial analytics come together to determine an opportune time to own large brands. Qualitative and quantitative data sets intersect to provide a complete view of corporate value.

What percentage of overall value can be attributed to Brand?

Brand is a collection of perceptions about a company, its people, assets, conduct, and visual identity. Experts at the Federal Reserve estimate that intangible assets, a core component of Brand, may represent up to $8 Trillion of the $18.5 Trillion value of the US economy.

Investment Rationale

When constructing an investment portfolio, consider how Brand Value:

Where might this Index fit into an investor’s portfolio?

Depending on an individual investor’s specific goals, it could serve as: