Securities Index Generation Using Intangible Asset Measures
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Solution Overview
Problem
Conventional security indices fail to adequately evaluate and incorporate the value of intangible assets, such as intellectual property, trademarks, and trade secrets, which have become a significant portion of a company's market value, leading to an oversight in investment strategies.
Innovation Solution
A method and system for generating an index of securities that selects and weights constituents based on measures of quality and value of intangible assets, including patent, trademark, and trade secret ratings, allowing for the creation of investment portfolios that capitalize on intellectual capital value.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If conventional security indices are used to evaluate companies, then tangible assets are emphasized, but intangible assets are overlooked
Solution Approach 1:
The patent segments the asset evaluation process into tangible and intangible components, creating separate measurement frameworks for each. The system divides company value into distinct categories (physical assets, intellectual property, human capital, organizational capital) and applies specialized evaluation methods to each segment, thereby capturing intangible asset values that conventional unified approaches miss.
Solution Approach 2:
The patent introduces intermediary measurement tools and frameworks that bridge the gap between conventional accounting methods and the need to capture intangible values. These intermediaries include adjusted valuation models, intangible asset disclosure standards, and composite scoring systems that translate difficult-to-measure intangibles into investable metrics.
2Productivity
If traditional asset measurement methods are used, then investment strategies remain simple, but they fail to capture the predominance of intangible assets in the knowledge economy
Solution Approach 1:
The patent applies preliminary actions by pre-establishing frameworks for intangible asset measurement and classification before the actual investment decision-making process. The system pre-ranks companies based on intangible asset metrics, pre-calculates adjusted valuations, and pre-segments the investment universe into categories based on intangible strength, thereby simplifying the subsequent investment selection process despite the increased measurement complexity.
Data Source
AI summary
A method for generating an index of securities includes selecting index constituents and weighing the selected index constituents by a measure (“an intangible asset measure”) of quality and/or value of the intangible assets of constituent entities. The index constituents can be selected from a set of potential constituents based on an intangible asset measure of each constituent in the set, and the selected index constituents may then be weighted by a desired measure or methodology or weighted equally, or by an intangible asset measure. Another method for generating an index of securities includes combining groups of constituents, which are selected based on an intangible asset measure, to be index constituents and weighing the index constituents by a desired measure or methodology.