Reputation premium is the greatest reward ESG-centered companies can realize, and reputation risk is the greatest threat. Reputation value metrics that estimate premium and risk can help companies insure, manage, and arbitrage reputation risk.
PITTSBURGH (PRWEB) March 04, 2021
Equity portfolios built algorithmically on 1,000 weeks of Reputational Value Metrics have over 15 years outperformed both the net asset value (NAV) of MSCI USA ESG Select ETF, one of the oldest ESG funds, and the price returns of Berkshire Hathaway, a firm chaired by reputation-savvy Warren Buffet.
“Reputation premium is the greatest reward ESG-centered companies can realize, and reputation risk is the greatest threat,” said Steel City Re CEO Nir Kossovsky. “Reputation value metrics that estimate premium and risk can help companies insure, manage, and arbitrage reputation risk.”
Two stock indexes generated by Steel City Re’s proprietary algorithms using these reputation value metrics show that reputation value more consistently identifies equity value opportunities than either bellwether measures of ESG or the value of the public company most closely associated with reputation, Warren Buffet’s Berkshire Hathaway.
As of the end of February, the 15-year price returns for RepuSPX and Berkshire Hathaway were 504% and 323% respectively; for RepuStars (price) and MSCI USA ESG Select ETF (NAV), 257% and 208% respectively. The S&P500 returns for the period were 197%. In the tumultuous 12 months just passed, RepuSPX and Berkshire Hathaway rose 27% and 18% respectively; RepuStars and MSCI ESG ETF rose 41% and 34% respectively. The S&P500 rose 29%. For this calendar year, the two month returns for RepuStars, Berkshire Hathaway, RepuSPX, MSCI ESG ETF and the S&P500 are, respectively, 11%, 6%, 5%, 3% and 2%. The total returns for RepuStars over the same three periods were 364%, 44%, and 13% respectively.
The RepuSPX index is limited to constituents of the S&P500 only. RepuStars (INDEXCME: REPUVAR) is open to all US market-traded companies, including non-US-domiciled and ADRs, with market capitalizations greater than $1 billion. Both portfolios are constructed algorithmically and exclude dividends; INDEXCME:REPUVART reports total returns. RepuStars is calculated by S&P/Dow Jones Indices.
Commemorating today its 1000th weekly calculation, Steel City Re’s leverages an actuarial base presently of 7 million measures derived from an average of 5,700 public companies each week. With these finders of reputation premium, Steel City Re pioneered the field of parametric reputation insurances and infused quantitative rigor to a reputation risk advisory service informed by behavioral economics; e.g.,
- Upgraded enterprise risk governance and management strategies including parametric reputational insurance policy underwriting for companies, spanning sectors from financial to general business services;
- Financed reputation risk through hundreds of insurance captives that paid tens of millions of dollars in claims for reputational value losses;
- Advised third-party ESG-focused hedge fund strategies.
Steel City Re, an overseas advisor to Lloyd’s Tokio Marine Kiln, is the exclusive provider of parametric reputation risk insurances and advisory services using a risk management framework informed by behavioral economics.