"A strong brand performs better than the overall market."
"Investing in leading brands is the key to delivering ROI in challenging economic times," said Marc Cujai, CEO of MC Asset Management (MCVM), to Citywire Switzerland.
MCVM, based in Liechtenstein, manages the China Brands Fund and the Global Brands Fund . The main focus is on brands that dominate in individual markets. Working with business consultants and entrepreneurs, the MCVM team has come to the conclusion that a strong brand performs better than the market as a whole . Because when the economy is generally deteriorating, the strength of the brand helps to maintain the company's revenue and a high profit margin for the products.
At the end of April, China Brands Fund's top holdings included technology companies such as Alibaba and Tencent, as well as pharmaceutical companies such as Jiangsu Hengrui Medicine. The rise of the Chinese middle class has led brands with elastic pricing strategies to dominate the market. The spirits brand Kweichow Moutai is among the Fund's top positions and China International Travel will benefit as well.
Investing in brands involves risks, as public opinion about them can change rapidly. This was particularly evident in the privacy issue on Facebook. MCVM looks at the individual brands over the long term by checking that the company's concept still works. Some negative examples from the past include Blackberry and Nokia, whose corporate strategies had a negative impact on brand image. Therefore, the managers talk to experts such as entrepreneurs and consultants from various sectors of the market to take a long-term view of the technology and pharmaceutical market.
The China Brands Fund and the Global Brands Fund have been on the market for two and a half years. As a result, they achieved returns of 34% (China Brands Fonds) and 8.6% (Global Brands Fonds) in May 2018.