What do ABB, Rolls-Royce and Nvidia have in common? In terms of their operational activities, remarkably little. ABB is a technology conglomerate focused on electrification and automation, Rolls-Royce develops complex drivetrain and energy systems for safety-critical applications in the air, at sea and on land, and Nvidia has evolved from the inventor of GPU to the provider of complete infrastructure for accelerated computing and artificial intelligence. Why the answer is nevertheless so interesting is that while there may be worlds between them in their day-to-day business, these companies are in the same boat in the Swissquote Innovation Money Makers Index.
The name of the index says it all. The strategy barometer targets not those who make the boldest promises for the future, but rather global market leaders that are already translating technological progress into turnover and profits. The portfolio is managed in conjunction with The Singularity Group (TSG), a Zurich-based investment boutique focused on applied innovation. Thematically, it covers structural growth fields such as next-generation industry, energy efficiency, AI, digital infrastructure and healthcare technology. This differentiates the approach from many classic themed baskets. The Singularity Innovation Score developed by TSG measures what proportion of a company’s sales actually arises from applied innovation. It looks at which companies across various sectors not only develop innovations but have also made them commercially viable. This screening is also intended to reveal less crowded and more attractively valued market segments, thereby improving diversification without losing sight of transformative trends.
The Swissquote Innovation Money Makers Index is no passive default index, however – it is a dynamic, actively managed barometer. Swissquote can add, replace or remove components, while Leonteq, as the index calculation agent, has a right of veto. At the heart of the concept is not a rigid list, therefore, but rather a continually reviewed selection of companies which monetise innovation on a permanent basis. The rules set a clear framework for the design. The basket comprises at least 10 and no more than 60 holdings. The individual stocks must meet certain minimum criteria of size and fungibility, including a market capitalisation of at least USDmn 100 and an average daily trading volume of around USD 100,000.
The actual strength of the index lies in its definition of innovation. It understands innovation not as a synonym for “early-stage, unprofitable tech venture”, but rather as the ability to transform new technologies, new processes or new medical procedures into genuine revenue streams. That is why the index includes industrial and healthcare stocks as well as AI and semiconductor stars. This can bring advantages, because the portfolio covers a number of structural trends simultaneously and looks for winners beyond the usual hype. Less crowded market segments and greater diversification are the key. For investors, the investment primarily brings simplification: instead of building an international portfolio comprising dozens of stocks from a range of sectors, they get access to a highly promising strategy through a single index.