American Funds recently wrote about innovation from a different angle than from my original post: the benefit to the innovative company. Here are a few highlights:
“The markets often underestimate the impact innovation can have on a company’s growth prospects and future cash flows” – Steve Watson, Portfolio Manager at American Funds.
The technology industry is not the only area investors should look toward for innovative companies. They can be found in some of the most stable industries.
Thomson Reuters tracks the top 100 Global Innovators and found that spent over $223 billion on R&D but their aggregate performance beat the S&P 500 by 4%.
At the end of the day, innovation is affecting our daily lives. It has changed the way we shop (e-commerce), the way we communicate (smartphones), and the way we use energy (LED light bulbs) to name just a few. And if that’s not enough, investing in innovative companies may have a positive effect on your portfolio.