DWS launches fund focused on intellectual capital

DWS launches fund focused on intellectual capital

Fund house DWS is launching a fund to invest in companies it believes have intellectual capital.

The equity fund will invest in companies the managers of the fund believe have more intellectual property than rival businesses, which it defines as companies with intangible assets that the market is not properly valuing.

The managers believe the best performing stocks over the past decade have been companies with relatively low levels of fixed assets, that is property or stock, but instead derive their value from the uniqueness of the product.

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An example of a sector where many of the assets are intangible is technology, and technology stocks have performed well over the past decade.

The absolute best performing stock on the US market over the decade from 2009 to 2019 was Netflix, which returned 6,400 per cent, alongside next best stock Amazon, which returned 2,600 per cent in the ten-year period.

DWS's fund will have an annual charge of 0.40 per cent.

Tom Sparke, investment director at GDIM, a discretionary fund management firm in Cambridge, said: "This seems like an interesting idea for a fund.  

"Firms with market-leading or problem–solving intellectual capital clearly have a distinct advantage and we have seen some huge successes for those who have been able to harness this effectively.  

"Valuing intangible assets is always subjective and can be extremely tricky, so formalising an approach to this could yield some excellent results over the long-term. The seed share class of 0.40 per cent is an aggressive and attractive element too."