US China IP 200™ Index

The US China IP 200™ Index is the world’s first index based on the value of both US and Chinese intellectual property. The Index is comprised of the top 100 companies that own the most valuable US patents relative to their book value and 100 companies that have the most valuable Chinese patents. With the creation of this Index, for the first time, the investment community can observe the performance of US and Chinese companies that share a common strength in commercializing patented technology. 

BACKGROUND 

Created by Ocean Tomo, LLC, the leading intellectual capital merchant bank™ firm, and the Shenzhen United Property and Share Rights Exchange (UPEX), a commercial platform pioneering the combination of “Technology + Finance” in China to help SMEs grow, the US China IP 200™ Index is based on a common belief that companies with high intellectual property values perform better in the marketplace. This contention has proven accurate in 5-years of back-testing for this Index as well as empirical proof provided by the performance of both the China Intellectual Property Index (Code: 000983) as well as the Ocean Tomo 300® Patent Index (NYSE Euronext: OTPAT). 

UPEX and Ocean Tomo share a common belief that IP represents a major bridge between the economies of China and the United States and this collaboration, the first in a series of initiatives, will enhance investor understanding and help support the creation of a global market for intellectual property rights investment. 

INDEX CONSTRUCTION 

Index Structure

The index consists of 100 US companies rated as particularly innovative by the Ocean Tomo Ratings™ system and 100 Chinese companies as determined by the UPEX patent ratings system. All companies must be widely tradable by global investors with sufficient liquidity to prevent market distortions. The index will be weighted by market capitalization.

Creating the Selection Universe

The universe of stocks available to the US portion of the index is based on the following restrictions:

  • Companies holding US patents

  • Traded on either the NYSE or NASDAQ

  • More than 500,000 average daily trading volume in the 30-day period prior to constitution

The universe of stocks available to the China portion of the index is based on the following restrictions:

  • Chinese companies holding Chinese patents

  • Trade on Shenzhen, Shanghai, Hong Kong exchanges, NYSE or NASDAQ

Selection Criteria

Stocks for the US portion of the index are selected based on the following method:

  • An aggregate Ocean Tomo Ratings™ OTMV value is determined

  • The total book value of the company is gathered

  • The Innovation Ratio is found by taking the ratio of aggregate OTMV to book value

  • The top 100 companies by Innovation Ratio are included in the index

Stocks for the China portion of the index are selected based on the following method:

  • The value of all patents owned by the company is determined through UPEX patent ratings system 

  • The total assets of the company is gathered 

  • The IPV value is found by taking the ratio of the value of the company’s patents to its total assets 

  • The top 100 companies by IPV are included in the index 

PERFORMANCE 

Over the five-years of back testing, the US China IP 200™ Index has outperformed its’ benchmark the MSCI World Index by 2922 basis points. This performance record is auspicious and demonstrates the innovation leadership within the developed and developing world.

Ocean Tomo ITPE 200 Patent Index 5 year back test