Fact: Companies carry two types of assets

  1. Intangible assets are nonphysical in nature and generally consist of patents, copyrights, trademarks, licenses and a company’s brand.
  2. Tangible assets consist of traditional physical assets such as property, equipment and inventory.

As the economy continues to evolve amid the proliferation of services and technology-oriented companies, the enterprise value of a company is being driven more by intangible than tangible assets.

Asset mix of S&P 5001 companies

WebA chart showing intangible assets decreasing as part of the asset mix of S&P 500 companies for every decade beginning with 1975

Source: Aon-Ponemon Institute LLC, “Financial Impact of Intellectual Property & Cyber Assets Report, Global Edition 2020."

The proportion of intangible assets continues to rise reflecting an evolution to service and technology-oriented companies.


  • The valuation of intangible assets can be more subjective than that of real assets since current accounting practices do not adequately capture intangible assets on company balance sheets. For example, book value, which measures company assets minus liabilities, may disregard critical intangible assets.
  • Security analysis must account for these intangibles-related differences to gauge a company’s growth potential and determine what to pay for that growth.

So what?

  • Intangible assets, like brands and patents, are nothing new, but the assessment of a growing number of intangible assets is constantly evolving. That is why active security selection is critical in evaluating the intangible aspects of a business that drive enterprise value and potential investment return.
  • As we might be on the verge of a low-beta2 investment environment, an investor may want to consider the role that alpha3 plays relative to their investment objectives—and seek to deliver that alpha helped by an experienced manager who uses fundamental, bottom up research.


  1. The S&P 500 Index measures the broad US stock market. It is not possible to invest directly in an index.
  2. Beta measures the volatility of a security or portfolio to market movements.
  3. Alpha measures a portfolio’s risk-adjusted performance.

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