The Accuvest Iconic U.S. Brands Index (“the Index”) measures the performance of U.S. listed companies with Iconic Brands, which is defined as the leading companies that have (A) a primary Business-to-Consumer (B2C) focus, or (B) a primary Business-to-Business (B2B) focus in a sub-industry that is deemed vital to the consumption supply chain. The Index constituents, selected from the identified sub-industries through a multi-step selection process, are intended to provide a better means of tracking a lifetime of consumer spending. As of 2017, the consumption component of U.S. GDP ($12 trillion) equated to roughly 70% of GDP. Accessing a lifetime of household consumption, via Iconic Brands across a diverse group of sectors and industries, is an addressable market not currently being tracked.
The brand(s) of a company are often the most valuable corporate asset. Brands spent roughly $493 billion on global advertising in 2016 (Source: CNBC). The bigger the brand, the more ad spending that typically happens. Over time, the most important brands build strong emotional connections with consumers. That loyalty allows for each brand to have a significant competitive advantage over its competitors. The result of sustainable competitive advantages is often strong revenue and cash flow growth. These factors along with many more are typically associated with companies that offer significant shareholder value over full market cycles.
The Accuvest Iconic U.S. Brands index attempts to capture the benefits of high brand value by tracking a basket of the leading business-to-consumer and business-to-business brands benefitting from a consumption-driven economy. The Brands Index has historically outperformed other popular broad market indices because of two primary and consistent factors from within the Index methodology:
1. A conscious over-weight to the Consumer Discretionary & Staples sectors
2. A “leaders-only” approach to brand security selection.
A SMART-CORE INDEX
Risk & Return Statistics as of 9/30/2017
Industry overweights to key consumer segments
Industry overweights & iconic brand exposure
Retailing: 16.4% Brands Index versus 5.5% for the S&P 500
Index exposure to: Ross Stores, Amazon, Home Depot, Lowe's, Priceline, Expedia, Dollar Tree, Dollar General, Netflix, Target, TJX Cos, Best Buy
Consumer Services: 5.8% Brands Index versus 1.9% for the S&P 500
Index exposure to: Marriot International, Starbucks, McDonalds, Carnival Cruise Lines
Consumer Durables & Apparel: 4.6% Brands Index versus 1.2% for the S&P 500
Index exposure to: Nike, Newell Brands, DR Horton (homes), Lennar (homes)
Automobiles & Components: 3.7% Brands Index versus 0.7% for the S&P 500
Index exposure to: General Motors, Ford Motor Company, Tesla
Food & Staples Retailing: 4.4% Brands Index versus 1.8% for the S&P 500
Index exposure to: CVS Health, Wal-Mart, COSTCO, Kroger, Walgreens
Household & Personal Products: 4.4% Brands Index versus 1.8% for the S&P 500
Index exposure to: Coty, Estee Lauder, Colgate-Palmolive, Proctor & Gamble, Kimberly Clark
Aggregate Index Characteristics versus the S&P 500 Index
Aggregate Index Sector Weights versus the S&P 500
The Iconic U.S. Brands Index offers a persistent & conscious overweight to Consumer Discretionary & Consumer Staples Sectors