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Great Brands Can Be A Great Investment

Companies that own strong brands have a competitive advantage as their products and services are top of mind when customers are deciding what product or service to buy. For this reason, companies that own and invest in building brands can be a great long-term investment.

What is a brand?

Brands ensure products are top of mind when consumers make buying decisions. Advertising and marketing consistently reinforce brand awareness and recognition, which forms a psychological and emotional bond between the brand and consumers.

Which brands are worthy of investment?

The world’s best 100 brands are measured annually in the WPP BrandZ report.

As stated in the 2016 report introduction:

First, brand value correlates with business success; brands with high value are more likely to increase sales and market share going forward. Second, brand value correlates with high shareholder returns. Companies that invest in brands grow their top-line faster. Organic top-line growth is the biggest determinant of total shareholders returns.

Companies that have remained in the S&P 500 over decades tend to also be ones that own strong brands, like Coca-Cola, General Electric and Nike. The S&P 500 returned 49% between 2007 and 2017. An investment in companies with strong brands would have generated returns of 94% (according to statistics from BrandFinance).

As Warren Buffett so succinctly put it;

Possessing a powerful worldwide brand is essential for sustained success

Warren Buffett

At AXIAM, we buy shares in companies, regardless of their geography, that have great brands that are known, loved and used by people around the world daily. Sign up to our newsletter or follow us on Twitter to learn more about investment in the best global brands or contact our fund management team to invest.

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