Over recent years we have been tracking how companies identified as leading innovators subsequently perform in terms of growth in shareholder value. Linking innovation efficiency to out-performance against all major indices has proven the relationship that many across industry believe in and hope for: innovation pays. The latest round of analysis has just been completed and shows even greater performance than before.
Since 2012 we have been undertaking annual research on the financial returns gained from investing in stocks of the companies previously identified by the Innovation Leaders project. As shared previously, in a back-test undertaken in partnership with Bloomberg, a cross-sector portfolio of 20 major companies whose shares were held for two years after identification of their innovation prowess showed an annual return over the decade from April 2002 to 2012 with a CAGR of 14.5%. By comparison, taking just one leading market, over the same period average return for the S&P500 was 5%.
