Legal & General Investment Management (LGIM) has announced the launch of the L&G Global Brands UCITS ETF. The firm writes that the new fund continues to build on LGIM’s diverse range of ETFs and will provide investors with access to non-traditional investment opportunities through an innovative investment approach which focuses on companies with top global brands.
LGIM writes that the Global Brands UCITS ETF is the first ETF of its kind to integrate brand value into the investment process and aims to give investors access to a diversified portfolio that captures companies with the world’s most valuable brands.
The ETF leverages the expertise of Brand Finance, a brand valuation consultancy, certified to provide ISO-compliant brand valuation and evaluation across industries. Brand Finance’s established framework to determine brand value is based on five key metrics: Brand investment, Brand equity, Brand performance, Brand impact and Forecast revenues. Brands in the Brand Finance Global 100 list are ranked by aggregate brand value from millions of datapoints.
The funds’ index aims to track the performance of a basket of stocks based on those aggregate brand value scores, while also integrating liquidity, quality and ESG screens. To reduce portfolio concentration, the investment strategy adopts a ‘capped market-cap’ weighting approach that restricts the weight of any company to a maximum of 5 per cent on rebalancing days.
Richard Haigh, Managing Director, Brand Finance says: “A business’s brand is one of its most important financial assets. Used correctly, strong brands can unlock vast financial value for businesses and shareholders. Brand Finance is excited to partner with LGIM to launch this ETF and demonstrate the added value that brands bring. This will continue to reaffirm the role of brand in the boardroom.”
LGIM writes that the Global Brands ETF sits within LGIM’s ‘Access’ range, providing exposures that are designed to serve as a tactical or strategic tool for investors seeking ‘access’ to non-traditional investment opportunities.
The fund’s investment strategy recognises and capitalises on the improved financial performance exhibited by companies with the top brands globally across all sectors, such as LVMH, Apple, Samsung and Visa. Between 2016 and 2022, companies within the top 100 global brands list have, on average, exhibited 23 per cent higher shareholder yield, 19 per cent higher return on equity and 18 per cent higher operating margin when compared to mega cap peers in the MSCI World.
Aanand Venkatramanan Head of ETFs, EMEA at Legal & General Investment Management (LGIM), says: “From the phones in our pockets to the cars we drive, we are all familiar with brands and we have an instinctive grasp of their commercial value. We hope that the launch of this ETF will enable investors seeking exposure to such brands and companies that own them, gain access to a diversified portfolio of higher quality names that have historically demonstrated greater earnings resilience. We are pleased to partner with Brand Finance® whose research-based modelling and analysis is fundamental to this innovative and transparent investment proposition.”
Additionally, investing in an index with ESG filters can help support companies that prioritize sustainability and ethical practices, which has increasingly gained importance for investors’ strategies.”
Timo Pfeiffer, Chief Markets Officer at Solactive, adds: “Strong and valuable brands often have a history of consistent growth and customer loyalty. We are honored to expand our partnership with LGIM and collaborate with Brand Finance to be the index provider for the new L&G Global Brands UCITS ETF. The strategy can offer potential for long-term capital appreciation as these companies continue to innovate and expand their market presence.
The fund is listed on the London Stock Exchange and Borsa Italiana and is expected to be listed on XETRA Deutsche Boerse and SIX in Switzerland. It has been categorised as Article 8 under the Sustainable Finance Disclosure Regulation.
