Gavekal Capital: The Knowledge Effect Leads to Excess Stock Returns

Friday, May 8, 2015

The Knowledge Effect Leads to Excess Stock Returns

In a new white paper released today, we identify a stock market anomaly. The Knowledge Effect is the tendency of highly innovative companies to deliver excess returns for investors. Academic researchers first discovered an association between a firm’s knowledge capital and its stock performance. Our research and index results suggest there is an opportunity for investors to capitalize on this market anomaly.


1) Why companies that choose to pursue an innovation strategy generate abnormal returns, 

2) The root causes of this market inefficiency, and

3) The results of our indexes that track the Knowledge Effect in the developed and emerging markets.