Global X Funds has launched the Global X Iconic U.S. Brands ETF (LOGO).
Tracking the Accuvest Iconic US Brands Index, the fund offers exposure to US consumption by holding 100 of the most recognisable brands in the US as defined by the index provider, Accuvest Global Advisors.
The firm writes that as of 2016, annual consumption in the US was estimated at USD12.8 trillion, representing approximately 70 per cent of the total national GDP. US consumers increasingly direct that estimated USD12.8 trillion to brands that they are loyal to.
In a recent WPP survey over 80 per cent of consumers cited brand as a key consideration in their purchases, and 56 per cent stated brand, not price, was the most important factor.
LOGO offers investors an avenue to gain exposure to those loyal consumption habits.
“A strong and recognisable brand is becoming an increasingly valuable asset to a large corporation. It’s an intuitive notion that consumers continue to return to companies and brands that they trust – one that’s continually backed up by research into consumer behaviour and corporate earnings,” says Jay Jacobs, director of research at Global X. “We’re excited to offer investors a way to invest in US consumption via the brands they know and trust.”
“Despite the fact that the US is driven primarily by household spending, our research indicates that investors tend to be chronically underweight the brands and industries that stand to benefit from a consumer’s lifetime of spending,” says David Garff, president of Accuvest Global Advisors. “Consequently, we designed the Accuvest Iconic US Brands Index to provide what we believe is a more accurate representation of the economy’s primary driver.”
LOGO’s underlying index includes the top 100 companies according to the Iconic Brands Score, which represents the highest-ranking brands from a comprehensive analysis of consumption-focused industries.
The Iconic Brands Strength Score then rewards the companies in the top 100 with the highest revenue growth and absolute cash flow generation with a greater weighting in the Index. The 25 companies from the Tier 1 sub-industries (core to the consumption theme) with the highest Iconic Brands Strength Score receive 50 per cent of the total index exposure, with the remaining 75 constituents comprising the rest. LOGO is Global X’s fourth ETF in its suite of Thematic – People.