We have introduced our knowledge leader concept to our readers over the past few weeks (click here, here, here and here for more information). Today, we thought we would check in on how knowledge leaders (i.e. leading, innovative firms with a deep intangible capital reservoir) have done relative to knowledge followers (i.e. firms that choose to be innovation laggards).
Over the past four years, the average developed markets knowledge leader is up nearly 75% which outpaces the average developed markets knowledge follower by about 15% and the MSCI World Index by 21%. For knowledge leaders, the consumer discretionary, health care and information technology have led the way higher. While for knowledge followers, health care stock have far outgained the rest of the sectors. Over the past year, knowledge leaders have outpaced knowledge followers by a little more than 1% and over the past three months, knowledge leaders have fallen 2.5% less than knowledge followers.
Developed Markets Knowledge Leader Performance
Developed Markets Knowledge Follower Performance
The outperformance of knowledge leaders in the emerging markets is even more pronounced. The average emerging markets knowledge leader is 71% higher than it was a year ago. This is about 45% higher than the average emerging market knowledge follower over this same period.
Emerging Markets Knowledge Leader Performance
Emerging Markets Knowledge Follower Performance