Swiss Reputation Selection AMC

SWISS REPUTATION SELECTION
INVESTMENT CRITERION
EXECUTION
INVESTMENT APPROACHES

The financial boutique Brevalia AG and the research-based consulting boutique commsLAB AG launch the first reputation-based investment solution in Switzerland.

The certificate issued by Zürcher Kantonalbank under the name “ZKB Tracker Certificate Dynamic on Swiss Reputation Selection Basket” identifies the 20 best-reputed companies out of around 100 companies listed on the Swiss stock exchange and ranks them by reputation. The aim is to generate a sustainable excess return over the benchmark SPI (Swiss Performance Index). Stock selection and weighting are based on the Sedimented Reputation Index® (SRI®) developed by commsLAB AG and the fög – University of Zurich.

All relevant information on the certificate can be found under the following link: https://brevalia.ch/amc-reputation

Successful stock selection

Reputation allows a differentiation between companies that consistently meet publicly expressed expectations and those with negative fulfillment of expectations. In addition to economic expectations, Reputation also reflects the social contribution and the uniqueness of the company.

Selection criteria

Prerequisites for a reputation rating are the sufficient exposure of the company in publicly available sources, a market capitalization of at least CHF 200 million and an average daily turnover of at least CHF 2 million.

Reputation is tangible

The SRI® developed by commsLAB and the fög -Research Centre Public and Society of the University of Zurich serves to model the historically grown reputation anchored in public memory and allows the presentation of long-term developments.

Relevance for Swiss business location

The investment solution rewards companies that are publicly regarded as particularly trustworthy and sustainable for Switzerland as a business location. It is designed in particular for investors who are looking for promising investment strategies for stock market companies with relevance for the Swiss economy.
From around 100 companies listed on the Swiss Stock Exchange, the 20 best-reputated companies are identified each month and weighted according to reputation. The following video shows stocks and underlying sectors covered by the index for the period 2006 to 2020:

Reputation as an investment criterion

commsLAB applies reputation information as an investment criterion and for investment decisions on the stock markets.

The benchmark-oriented investment approach “Reputation-based Asset Allocation” (RB2A) is based on the contextual analysis, structuring and evaluation of reputation-relevant, publicly available information on Swiss listed companies with a strong resonance.

The result is a unique and completely stand-alone weighting strategy that reflects long-term positive reputation effects of companies via overweights in the active investment strategy.

Value adding factor

Reputation is a key value adding factor: companies with a good reputation achieve a better economic performance. → Learn more

Investment focus

Investments are made in companies with sustainable positive reputational effects that are potentially not already priced in.

Excess returns

Through an active, reputation-weighted investment strategy, sustainable excess returns can be achieved, with the potential for further increases depending on the focused narrative.

Reputation premium

Our measurements (SRI® model) show that reputation in the Swiss equity market is a relevant risk factor to explain equity returns. → Learn more

Execution and investment profiles

Regression-analytical evaluations of reputation and stock market data show the following, according to the research of Prof. Dr. Manfred Schwaiger, Institut für Marktorientierte Unternehmensführung, Ludwig-Maximilians-Universität München:

Investment effect

Investments in reputation-building activities over a longer period of time have a positive effect on the company’s value (stock market value).

Shares with an above-average reputation therefore generate significant excess returns.

Performance effect

The company’s overall reputation depends not only on its ability to innovate and communicate, but also on financial success.

An improvement in financial performance therefore leads to an improvement in reputation, regardless of the starting level.

Reputation-based Stock Selection

The reputation-based investment strategies of commsLAB AG invest in companies that have sustained positive reputation effects overall. As a significant value-adding factor, reputation is therefore systematically used as an investment criterion, with the aim of achieving long-term excess returns over traditional portfolio approaches.

Methodological information

commsLAB’s reputation-based investment strategies are based on the monitoring and assessment of around 100 of the most responsive exchange-listed Swiss companies. They provide the basis for outperforming the major benchmark indices on a reputation-weighted basis (SMI/SLI/SPI), or for focusing via stock-picking procedures on those securities that promise additional excess returns.

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RB2A Investment Approaches

Investment approach – Swiss Reputation Selection (Benchmark SPI)

The investment approach “Swiss Reputation Selection” aims to identify the 20 best-reputated companies out of around 100 companies listed on the Swiss stock exchange and to rank them in a reputation-weighted manner. Weighting criterion is the reputation (SRI®) of the individual companies. The chart shows the historical simulation of the investment approach. → Learn more

Swiss Reputation Selection Performance 2006 to 2020

Details investment approach

Basis Reputation data commsLAB/fög-UZH. Stock price information from SIX Financial Information
Distributions None. Net dividends (65%) are reinvested
Stock selection The prerequisites for reputation coding by commsLAB are: Sufficient presence of the company in publicly available sources, a market capitalization of at least CHF 200 million and an average daily trading volume of at least CHF 2 million. At any time, 20 companies are represented in the portfolio (stock picking)
Selection criterion Sedimented resonance and listed on the Swiss stock exchange
Frequency Monthly adjustment of weightings
Weighting Balanced-weighted: Fixed portfolio weightings, with an overweight of positive reputation. See ‘Current positions’ for effective weights.