Keith Cardoza, CFA
Justin Basara
Liddy Cooper
Rick Conroy

As the economy has transformed from a manufacturing base manned by laborers to a service base driven by knowledge workers, intellectual capital has emerged as a leading asset class among industrialized countries worldwide. Furthermore, recent and anticipated changes in accounting rules and securities reporting will broaden the market’s recognition of intangible assets, allowing companies to maximize value derived from their intellectual capital. This paper will review the character of intellectual capital, as well as chronicle its ongoing rise in importance as a measure of market value. To do so, we examine the growth of this asset class since the 1970s within the U.S. equities market as measured by the S&P 500® Index. Finally, we discuss the potential for more accurate valuations of intellectual property based on innovations of analysis, which stand to benefit investors