Estate Living Digital Publication Issue 2 February 2015 | Page 36

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INVESTMENT SAVVY

“Business efficiency, market
growth and investor confidence
all have an important influence on
share prices,” advises Alexander.
“But we have also observed that
companies that own stronger
brands tend to perform more
strongly in the market as a whole.
Brands have the ability to sustain
earnings during the tough times
through ‘brand loyalty’, but also
enhance growth during the good
times with their ability to enter
new markets and launch new
products. The relatively priced
nature of these products allows
these top brands to deliver hefty
margins and has the ability to
deter potential competitors
from entering the market – thus
enhancing the sustainability of
such premium margins, which
is something that investors are
always looking out for.”

agency that draws upon financial
results and projections for brand
valuation, presents a list of the
100 most valuable global brands.
“Interbrand reviews a company’s
financial statements, analyses
its market dynamics and the role
of a brand in income generation,
and separates those valuations
attributable to tangible assets
(capital, product and packaging,
etc.) from the residual that can
be ascribed to a brand,” says
Alexander.

“PCH back-tested the 2014
Interbrand Top 100 Brands as a
composite portfolio (market cap
weighted) to see how it stacked
up over the last 10 years against
the S&P 500 (US) and the MSCI
World Index (in USD) and the
Brands strategy performed well,
outperforming both benchmarks
and returning a relatively attractive
AccordingtoAlexander,forleading 8.45% per annum, versus 8.02%
brands, the cash flows tend to be of the S&P 500 and 7.2% of MSCI
resilient, reliable and sustainable WLD – all expressed as total
and often the sole basis of returns.”
a business’s existence. The
companies behind these leading The graph below depicts the
brands usually offer investors high relative performance of the three
market share, coupled with higher composites, based on 100 at
margins and low volatility. Every the start of the period – i.e. if you
year, Interbrand, a brand strategy invested $100 in the Top 100

Brands composite 10 years ago,
your investment would be worth
$225 today.
‘It is for this reason that Private
Client Holdings has built up select
investment portfolios for our
clients that consist of over 50%
of the companies behind these
100 top global brands. These are
quality companies, dependable
and well managed – these global
stalwarts offer investors the
necessary returns needed to
grow their wealth.”
Some of the companies that are
featured in Private Client Holdings’
portfolios as well as Interbrands’
Top 100 Global Brands are:
Samsung, Nestlé, Google and
Microsoft.