How the U100 index redefined innovation — and outperformed

Core Insights - The U.S. 100 Index (ASX: U100) underwent a significant methodology upgrade to better capture American innovation, now including companies from both NASDAQ and NYSE, applying an innovation filter based on R&D activity and intangible asset productivity [1][2] Group 1: Methodology Changes - The 2024 methodology change reflects the expanded definition of technology leadership, now encompassing semiconductors, data infrastructure, automation, and intelligent systems, rather than just software [2] - The innovation filter requires companies to demonstrate reinvestment through a positive R&D-to-sales ratio or productivity from intangible assets, distinguishing builders from owners [3] Group 2: Performance Metrics - Since the September 2024 methodology upgrade, the U100 Index has outperformed major benchmarks, including the Nasdaq 100 Index, by approximately 5% [4] - The U100 Index has returned about 37% since the upgrade, compared to roughly 32% for the Nasdaq 100, indicating that disciplined selection and measurable innovation contributed to this outperformance [8] Group 3: Key Contributors - Companies like Oracle, Taiwan Semiconductor, IBM, and Snowflake have significantly contributed to the U100 Index's performance, driven by trends such as cloud adoption and AI demand [9] - The index has successfully identified firms that are reinvesting in technology and scaling new revenue streams, rather than merely maintaining established ones [11] Group 4: Value Creation - The U100 Index's design demonstrates that innovation leadership can be measured and rewarded through a thoughtful structure, reflecting genuine value creation in the U.S. economy [13] - The upgraded index illustrates that when innovation is defined by reinvestment and real results, it leads to stronger performance and a more accurate depiction of technological leadership [15]