Leading brands momentum: how the strategy works

A good investment strategy does not begin with a list of issuers, but with clear decision-making rules. The selection criteria, number of securities in the portfolio, expected holding period, conditions for selling, performance benchmarks, and acceptable drawdown should all be defined in advance. Without these rules, a portfolio becomes a collection of random ideas: one company looks appealing today, another tomorrow. A new report comes out; analysts raise their target price. As a result, the portfolio’s composition and, just as importantly, its risk-control logic often remain unclear even to the person who assembled it.

In this article, I will discuss one of my personal strategies for the global market – “Leading brands momentum.” I have followed it since February 2025. The strategy uses a concentrated portfolio of 5–10 stocks of major global brands traded on US exchanges. The issuers themselves may be based elsewhere, including Canada, Europe, and Asia. The current investment universe includes 115 companies from different sectors and industries. What they share is scale, stock liquidity, and brand recognition.

Selection takes place in two stages: first, I analyze the stock’s price behavior; then I assess the company’s financial position relative to its industry peers. Positions are held while the trend remains favorable and replaced when market leadership shifts to other companies.

The strategy aims to outperform the S&P 500 Index on return and, ideally, on a risk-adjusted basis as well. It is an all-equity strategy, can experience significant drawdowns, and is suitable only for the aggressive portion of an investor’s capital. –

This article describes my personal experience and illustrates the methodology. It is not an individual investment recommendation. Investing involves risk. Returns are not guaranteed and may differ from expected results.

Not a set of ideas, but a clear system

In the market, any decision is easy to explain in hindsight. Did the stock rise? See, we assessed its potential correctly. Did it fail to rise? The market has simply not recognized the value of the business yet. Did it fall? Well, the risks materialized. There is an explanation for everything.

In reality, no one knows the future. That is why an investment strategy is not a collection of elegant explanations after the fact, but a set of rules established in advance. We must answer the following questions:

• which universe of assets to select securities from

• which criteria determine their inclusion in the portfolio

• how many positions may be held at the same time

• how to allocate capital between them

• when to maintain, reduce, or close a position

• which benchmark to use when evaluating the result

• what level of risk should be considered acceptable

The process cannot be fully automated. Financial data require interpretation, industries differ, and the market occasionally produces scenarios with no historical precedent. But the overall logic should remain stable and repeatable: the same algorithm is applied in every selection cycle. The rules are not adjusted to fit price movements or justify a result after the fact.

This principle matters to both asset managers and investment advisors. In the first case, trades are executed on the client’s behalf; in the second, the client receives investment recommendations. But the essence is the same: individual transactions must form a coherent system and serve a predefined objective. Otherwise, advisory turns into a stream of tips.

Why global brands are the focus

The strategy is based on a universe of 115 large public companies whose shares trade on US exchanges. Most of these brands are widely familiar: they are associated with computers and software, automobiles, banking services, food, clothing, social media, streaming, e-commerce, industrial equipment, and healthcare.

The location of a company’s headquarters is not critical: the list may include American, European, Canadian, and Asian companies. What matters is liquidity, a developed market, the availability of financial reporting, and the global reach of the business.

Why limit the selection to well-known brands?

• It creates clear boundaries for the process. There are thousands of issuers in the US market. A fixed universe makes the work more systematic. A well-known brand is often a sign of a large, mature company, although this does not eliminate the need for full financial analysis.

• Large brands usually have scalable businesses, transparent reporting, and liquid stocks. Their shares can generally be bought and sold without materially affecting the price – an important consideration for a strategy that rotates positions regularly, especially when larger amounts are involved.

• The list spans a range of industries: technology, finance, industrials, consumer sectors, healthcare, transportation, energy, media, and hospitality. This breadth helps prevent the strategy from becoming tied to a single theme.

At the same time, brand recognition is no guarantee of success. Even a strong company may face declining demand, a rising debt, or a weakening competitive position. The shares of a promising business may be overvalued, and the market may lose interest in them.

A recognizable brand is an initial filter, not a buy signal. Inclusion in the initial list means only that the company is eligible for consideration. To enter the portfolio, it must pass additional screening.

How 115 companies become 5–10

I will not go into every detail of the selection process; a potential investor does not need them to understand the essence of the strategy. What matters is the decision-making logic.

Price performance. First, I assess the behavior of the stock: how consistent the move is, where the price stands relative to historical levels, and whether the trend is changing. Preference is given to stronger stocks.

Financial position. An attractive price chart alone does not make a stock a high-quality investment. The rise may be speculative, driven by expectations or by gains across the sector as a whole. Therefore, after assessing price performance, I analyze the underlying business: profitability, debt, cash flow, stability of operating results, and other indicators. Comparisons should be made primarily within the same industry: a bank, a technology company, an equipment manufacturer, and a restaurant chain have different economics and different normal ranges for their metrics. The portfolio includes not simply stocks with attractive charts, but companies whose financial position looks sufficiently strong relative to direct competitors.

Portfolio construction. From the candidates that pass the screening, I assemble a concentrated portfolio – usually consisting of 5 to 10 stocks. I try to spread positions across industries, but I do not add securities merely for the sake of diversification. If there are few strong candidates, it is better to keep five than to dilute the portfolio with mediocre choices.

Ongoing monitoring. I review the portfolio composition regularly – typically once a month. This does not mean that numerous trades are made every month: positions are maintained as long as the stocks continue to meet the original criteria. Rotation occurs when the trend weakens or more promising candidates appear.

The process is always the same: initial list → price-performance analysis → financial review → portfolio construction → trend monitoring → new selection cycle. The companies in the portfolio change; the methodology does not.

A concentrated portfolio: the meaning and the risks

A portfolio of 5–10 companies is somewhat like a small ETF: it is also a basket of stocks from different industries. But there is a fundamental difference.

Funds usually hold many more issuers – dozens or even hundreds – so the positive or negative contribution of any single security is almost invisible in the overall result. A concentrated portfolio contains only a few positions, and each has a meaningful effect on its value. That is precisely the point of concentration: for strong companies to actually move the portfolio forward, their weights must matter. If the capital were spread across all 115 companies, the result would resemble the broader market, and the value of stock selection would disappear.

The trade-off is greater single-position risk. Even a major brand can lose 30–50% of its value, and companies in different sectors may come under pressure at the same time. During periods when market leadership changes, the strategy may lag the index significantly.

Risk can be reduced through several rules:

• the strategy uses liquid shares of large companies

• positions are distributed across industries where possible

• capital is not concentrated in a single security

• the portfolio is reviewed according to consistent rules

• a position is replaced if the trend weakens

• leverage and speculative strategies are not used

This, of course, does not make the strategy conservative: the portfolio consists entirely of stocks and is subject to substantial fluctuations. A drawdown of 20–30% is normal; under difficult market conditions, the decline may be even deeper.

Therefore, “Leading brands momentum” is not suitable for an emergency reserve or short-term financial goals. The recommended investment horizon is at least five years, and preferably longer.

Personal portfolio results

Below is the current portfolio chart. The data are in US dollars, at weekly intervals. I have followed the strategy since February 2025. The benchmark is the S&P 500 Index. This is the most natural comparison: the portfolio consists of large-company stocks traded on US exchanges, and the strategy is designed to outperform the broad market.

Key figures as of July 24, 2026:

• return – 35.7% per annum in US dollars

• maximum drawdown – minus 20.2% (duration: 36 weeks)

• return/risk ratio (RR) – 1.77

• alpha – 18.6% per annum

• beta – 0.84

For comparison: the S&P 500 over the same period showed:

• return – 15.7% per annum;

• maximum drawdown – minus 16.9% (18 weeks)

The portfolio is well ahead of the index in terms of return. Positive alpha indicates that the outperformance cannot be explained simply by taking on more market risk. A beta below one indicates that the portfolio has been less sensitive to movements in the S&P 500.

At the same time, the path to that result was difficult. The drawdown was deeper than the index’s, and the recovery took twice as long – 36 weeks rather than 18. For almost nine months, an investor would have seen a decline in the portfolio’s value or no new gains while the S&P 500 performed better. Therefore, the strategy cannot be judged on return alone: the additional return came with a more difficult investment experience.

Other important features:

• Short observation period. The strategy has been running for about a year and a half – long enough to test its mechanics, but not long enough to establish its stability through a full market cycle.

• Advisor fee. The chart does not reflect an advisory fee because this is a personal portfolio. For a client receiving investment advice, the result would be lower by at least the amount of the advisor’s fee (approximately 1–1.5% per annum). In addition, it may be affected by the speed with which recommendations are implemented, brokerage costs, and taxes depending on the client’s residency and investment infrastructure.

In other words, the results are promising, but it is still too early to draw firm conclusions about the strategy’s effectiveness.

Not investment advice. Investments involve risk. Returns are not guaranteed and may differ from expectations.

When the results were discouraging

The earlier part of the chart is just as revealing as the final section, where the portfolio is well ahead of the market. In one of the interim reports , the portfolio was down 8.8%, while the S&P 500 had risen 6.2%. At the same time, the portfolio’s maximum drawdown was also deeper by then: −20.2% compared with −16.9% for the index. The picture was frankly discouraging: the market was rising, while the active strategy was lagging behind.

At a time like that, the question naturally arises: why use such a strategy at all if simply buying the index produces a better result with a smaller drawdown?

An active strategy is not expected to outperform the market every month, quarter, or year. Moreover, if it moves exactly like the index, can we really expect it to generate additional return? To outperform the market, a strategy must deviate from it. That inevitably creates periods when the deviation works against us.

A concentrated portfolio is especially sensitive to changes in market leadership. If several companies lag temporarily, the portfolio may underperform the index even while hundreds of other S&P 500 stocks are doing well. The situation can then change: the next selection cycle identifies new leaders, individual positions rise sharply – and the gap closes quickly. That is roughly what happened in this case.

During periods of prolonged underperformance, it is important to check whether:

• the originally established rules are being followed

• the actual risk remains consistent with the stated level

• there are errors in the calculations or implementation

• the economic logic of the methodology remains intact

• the criteria are being adjusted retroactively to improve past performance statistics

If the process is working as intended and the drawdown remains within the accepted risk limits, one unsuccessful period does not invalidate the strategy. By the same token, the current growth is not definitive proof of its superiority. It shows only that abandoning the strategy during a period of underperformance would have been premature.

Reliable conclusions require at least five years of observation across different market phases: growth, correction, prolonged sideways markets, and shifts in industry leadership. So far, the statistics look encouraging, but the story is far from complete.

Strategy and investment advisory

The chart shows the results of my personal portfolio: I invest my own money, execute the trades myself, and publish the results openly – including the less successful periods. At the same time, “Leading brands momentum” is not merely a personal experiment, but a methodology that can also be used in client work.

I do not manage the client’s money: assets remain in the client’s brokerage account. Under an investment advisory agreement, the client receives personalized recommendations and executes the trades independently.

Without going into legal detail, the main formal distinction between investment advisory and discretionary asset management is that, under discretionary management, trades are executed by the manager, while under an advisory arrangement – by the client themselves. In either case, the specialist must clearly understand:

• what purpose the portfolio serves

• which rules govern asset selection

• under what conditions positions are reviewed

• what result is considered acceptable

• what level of risk the investor is willing to take

Independent execution does not mean the process lacks a systematic, strategic approach. The client can replicate the model portfolio: buy and sell the specified securities in the recommended proportions.

An individual approach does not mean “reinventing the stock market” for each client. What should be individualized is the capital structure : financial goals, investment horizon, currency, liquidity needs, acceptable risk, tax considerations, and infrastructure constraints.

Once these parameters are defined, the same strategy may suit different clients to different degrees. One client may allocate 10% of their capital to it, another 30%, while for a third it may not be appropriate at all.