DWS applies its proprietary CROCI valuation strategy to thematic investing with new intellectual capital fund

DWS is breaking new ground in the thematic space with the launch of an investment fund targeting companies with high levels of intellectual capital, which is generally not recognised on balance sheets but is a significant driver of revenue growth.

The DWS Invest CROCI Intellectual Capital fund is based on research by DWS’s in-house CROCI (Cash Return on Capital Invested) team, which finds that, over the past decade, economic growth and equity returns have increasingly been driven by companies with comparatively low capital and labour but a high concentration of intangible assets, or intellectual capital. Investors can position themselves to benefit from this trend by taking exposure to firms identified as possessing the intellectual capital required to create revenue growth in the new economy.

“DWS’s CROCI valuation investment approach has measured intangible assets since 1996 and is the perfect analysis tool for finding future revenue generators linked to intellectual capital. Our new fund takes an established investment approach and uses it to capture the structural shift in the economy out of physical capital into intangible capital. The result is a unique vehicle for positioning for future growth,” said Francesco Curto, co-Head of Research and Head of the CROCI Investment Strategy and Valuation Group.

The research also finds that:

  • There has been no real corporate earnings growth on an aggregate basis over the past decade, which presents a fundamental challenge to equity investors (most of the earnings growth since 2007 has come from IT and healthcare; whereas the earnings of energy, materials and utilities have fallen in real terms).

  • Only companies with intangible assets have been able to generate earnings growth, and the existence of intangible assets is a better indicator of growth than simple sector classification.

  • Intangible assets are generally not reported on balance sheets, which tends to distort profitability and valuation ratios calculated using reported accounts. The existence of intellectual capital is more important to company valuation than how much is spent on those assets in absolute terms.

  • Share price performance has followed earnings growth.


The new fund uses a systematic methodology to provide exposure to companies with real earnings growth potential based on intellectual capital. It has a standard seeding share class annual all-in fee of 40bps.

For more information, or for a copy of the research report which the fund is based on (titled: CROCI Focus, Intellectual Capital), please contact:

John Ferry
Phone: +44 (0) 7989726985 
E-Mail: john.ferry@dws.com

Nick Bone
Phone: +44 (0) 20 754 72 603
E-Mail: nick.bone@dws.com


Notes to Editors
Cash Return on Capital Invested (CROCI) is a cash-flow-based analysis which, by making a series of economic adjustments to traditional accounting data, aims to make non-financial companies comparable—regardless of industry or domicile. The main areas where CROCI “economic data” differ from accounting data are as follows: 

  • Accounting for “hidden” liabilities – CROCI Enterprise Value (EV) includes not only financial liabilities (such as debt) but also operational liabilities (such as operating lease commitments, warranties, pension funding, specific provisions etc).
  • Depreciating similar assets in a similar manner - Adjusting depreciation to reflect “economic depreciation” and effective useful economic life.
  • Replacement value of assets – Inflating the value of net assets using the relevant inflator (based on the real age of assets).
  • Unreported assets – Systematically capitalizing real cash-generative assets that are left off the balance sheet. Research and development costs and advertising are examples of such assets.

Economic PE (Ec.PE): is the CROCI version of the PE ratio and is calculated as EV/(CROCI * NCI) or (EV/NCI)/CROCI.


DWS Group
DWS Group (DWS) is one of the world's leading asset managers with EUR 704bn of assets under management (as of 31 March 2019). Building on more than 60 years of experience and a reputation for excellence in Germany and across Europe, DWS has come to be recognized by clients globally as a trusted source for integrated investment solutions, stability and innovation across a full spectrum of investment disciplines.

We offer individuals and institutions access to our strong investment capabilities across all major asset classes and solutions aligned to growth trends. Our diverse expertise in Active, Passive and Alternatives asset management – as well as our deep environmental, social and governance focus – complement each other when creating targeted solutions for our clients. Our expertise and on-the-ground-knowledge of our economists, research analysts and investment professionals are brought together in one consistent global CIO View, which guides our strategic investment approach.

DWS wants to innovate and shape the future of investing: with approximately 3,600 employees in offices all over the world, we are local while being one global team.

Important Notice
This press release has been issued in the UK and approved by DWS Investments UK Limited. DWS Investments UK Limited is authorised and regulated by the Financial Conduct Authority. Any reference to “DWS”, “Deutsche Asset Management” or “Deutsche AM” shall, unless otherwise required by the context, be understood as a reference to DWS Investments UK Limited including any of its parent companies, any of its or its parents affiliates or subsidiaries and, as the case may be, any investment companies promoted or managed by any of those entities. Past performance is not a guide for future returns.

Without limitation, this document does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction. Any investment decision in relation to a fund should be based solely on the latest version of the prospectus, the audited annual and, if more recent, un-audited semi-annual reports and the Key Investor Information Document (KIID), all of which are available in English upon request.

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