Legal & General Investment Management (LGIM) has launched the L&G Global Brands Ucits ETF, which integrates brand value into the investment process to build diversified portfolios.
According to the asset manager, the ETF will give investors access to a diversified portfolio by focusing on brands that have historically demonstrated greater earnings resilience.
The ETF, currently listed on the London Stock Exchange and Borsa Italiana, is expected to be listed shortly on XETRA Deutsche Boerse and SIX in Switzerland. It is an Article 8 fund under the Sustainable Finance Disclosure Regulation.
The ETF leverages the expertise of brand valuation consultancy Brand Finance, certified to provide ISO-compliant brand valuation and evaluation across industries.
The framework determines brand value based on five metrics: brand investment, brand equity, brand performance, brand impact and forecast revenues.
The funds’ index aims to track the performance of a basket of stocks determined by their combined brand value scores, incorporating liquidity, quality and ESG criteria.
To reduce portfolio concentration, LGIM said the strategy adopts a “capped market-cap” weighting approach that restricts the weight of any company to a maximum of 5% on rebalancing days.
The asset manager cited that from 2016 to 2022, the top 100 global brands averaged 23% more for shareholder yield, 19% higher return on equity and 18% better operating margin than mega-cap companies in the MSCI World.
Aanand Venkatramanan, head of ETFs, Emea at LGIM, said: “Additionally, investing in an index with ESG filters can help support companies that prioritise sustainability and ethical practices, which has increasingly gained importance for investors’ strategies.”
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