R&D capital-to-assets

Summary (Eng)

The COVID-19 pandemic has shaken the global economy and changed the landscape of the market in many aspects. It is worthwhile to pay attention to changes in the proportion of assets of global companies. The proportion of intangible assets has been on the rise since 1950. Industrial property rights, R&D costs and patents can often be classified as intangibles. This report has validated whether, of these intangible assets, R&D costs could lead to actual returns.  

The R&D capital to Asset(Rca) covered in this report is calculated by applying linear depreciation rate of 20% on annual R&D costs over the past five years, and dividing them into total assets. Having analyzed the Rca factor, the effect of the factor is clear, and the effect has been growing in recent years. This suggests that the long-only play, which buys stocks with high Rca factor values, and the long-short strategy, which combines selling stocks with low factor values, can be very effective.