Trustworthy Companies Offer Superior Investment Returns with Less Risk
This June Trust Across America-Trust Around the World (TAA-TAW) retained Index One, a global back testing and index creation firm based in London to evaluate our FACTS® Framework (ten year historical results) versus major US indexes.”
The results are as follows with annual rebalancing:
The top 50 FACTS® companies outperformed IWD (iShares Russell 1000 Value ETF) by 47% (15.46% vs.10.51% ).
The top 100 FACTS® companies outperformed IWD by 52.9%, 16.07% vs. 10.51% for IWD
Index One also performed the same analysis using the SPDR S&P 500 (SPY) ETF. 16.07% (50 companies) and 15.46% (100 companies) respectively vs. 15.27% for SPY.
(Alpha, Beta, Treynor Ratio, Upside and Downside Capture ratios produced excellent results)
Methodology: Ten years ago Trust Across America-Trust Around the World (TAA-TAW) constructed a model to evaluate the trustworthiness of public companies, incorporating quantifiable metrics and data and named it the FACTS® Framework, an acronym that includes five drivers or indicators of trustworthy business behavior. They are:
- Financial stability
- Accounting conservativeness
- Corporate governance
Using our FACTS® Framework TAA-TAW quantitatively screens 1500+ of the largest US public companies based on publicly available data. The companies do not participate in the analysis, nor are any internal assessments or surveys completed. Understanding that no company is perfect, TAA-TAW can identify the “best of the best” in trust.
According to Barbara Brooks Kimmel, TAA-TAW founder, “When we built this framework over ten years ago we were advised that a ten year tracked record was required before serious consideration could be given to the model. Achieving a higher return than SPY with lower risk not only strengthens the “Business Case for Trust” but also provides the investment community with an opportunity to lower risk without sacrificing returns. And perhaps even more important, it rewards companies who proactively lead with trust.”