Blog / Consumer goods overtake aerospace and defence in the US Patent Elite Index


31 January 2020

The US Patent Elite Index tracks the relative share performance of the top 100 companies with the most active patents in the US. The US Patent Elite Index grew 11% from January 2018 to January 2020. The sectors that drove this growth were primarily the consumer goods, aerospace and defence and computing and software sectors.

Since the index began in January 2018, there has been a close correlation between the US Patent Elite Index and the NASDAQ Composite Index. Both indices suffered falls between January 2018 and January 2019 of -12% and -6%, respectively. However, both have seen strong recoveries in 2019 with the US Patent Elite Index driven by the semiconductor (+58 points) and electronic sectors (+43 points). While there has been some divergence through 2019, this stabilised in the fourth quarter of 2019 with both indices recording a growth of 9%.

The consumer goods sector grew the most over the 24-month period, recording a growth of 55 points from January 2018. This has largely been driven by the sector’s 2019 performance with an increase of 39 points, although this is slowing as the sector recorded only a six-point growth in the fourth quarter of 2019.

The aerospace and defence sector ranked second for two-year growth in January 2020, with a 42-point return from January 2018. Similar to the consumer goods sector, this growth has largely been driven by the sector’s 2019 performance with a 32-point increase; however, this is coupled with a sluggish growth in the fourth quarter at two points.

The computing and software sector ranked third for growth over the 24-month period, driven by a significant improvement in its performance in the last year; between January 2018 and January 2019, the sector’s index recorded a loss of two points but bounced back to record gains of 35 points between January 2019 and January 2020, with a solid eight-point increase over the fourth quarter of 2019.

Over the 24-month period, the chemical, energy and automotive sectors performed poorly on the US Patent Elite Index. The poorest performing sector was the chemicals sector, which saw a 38-point decrease in its index between January 2018 and January 2020; however, the index recorded an uptick of six points in the fourth quarter of 2019.

The energy sector’s index saw a two-year fall of 33 points but recorded a positive return of 12 points between January 2019 and January 2020. The 2019 growth was driven by Baker Hughes Inc and Schlumberger Technology Corporation.

Finally, the automotive sector has also struggled over the last two years as the overall trend saw the automotive index falling to 77 points by January 2020, a decrease of 23% from January 2018. This was driven by all the companies in the sector, except for Toyota Jidosha Kabushiki Kaisha which bucked the curve. Subsequently however, all the companies in the index, bar General Motors, recorded growth in the fourth quarter of 2019 – with Honda Motor leading the way.

Methodology
The US Patent Elite Index tracks the relative share performance of the top-100 companies with the largest active patent grants in the US and benchmarks them against the NASDAQ Composite Index.

The top 100 companies are grouped by the sector in which they operate to provide an overview of their share price performance against the NASDAQ Composite Index over a 24-month period, starting from 1 January 2018 to 1 January 2020.

We have used January 2018 as the base period for the NASDAQ Composite Index and the share prices of the companies mentioned (where January 2018 = 100) and tracked the share price movements month on month as a proportion of the base to form the relevant indices.

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