Companies we use daily often outperform the market. This isn’t luck. It’s simple economics.
These businesses combine essential products, deep customer trust, durable competitive advantages, smart capital allocation and adaptability.
Their offerings are integral to daily life, producing steady, predictable cash flows.
Their entrenched positions build high barriers for competitors’ in terms of brand loyalty, ecosystem lock-in and scale advantages that protect profits and market share.
Consistent usage cultivates customer loyalty, leading to high switching costs. This, in turn, drives recurring revenue and increases lifetime customer value, ultimately benefiting shareholders.
These companies have the resources to innovate, improve, and expand, fueling sustainable growth. Trusted and essential, they hold pricing power even in downturns, supporting margins.
With their extensive, well-established customer bases, these companies are well-positioned for long-term scaling and market expansion.
This creates a virtuous cycle of growth, profitability, and resilience that rewards patient investors.
To identify companies whose brands you encounter daily, consider these questions:
- Are the people in charge truly owners at heart, or just hired guns chasing quarterly bonuses?
- Do founders still hold meaningful stakes? (If not, why not?)
- Is the company sharing its growth benefits with customers, building loyalty through better service or lower prices?
- Is the business operating in a growing arena—think tech, healthcare, consumer trends—or stuck in a shrinking pond?
- Does it boast multi-layered economic moats, distribution advantages, pricing power, a strong culture and a brand that is impossible to copy?
- Is this a company we can’t live without? One whose products sell worldwide?
- Is capital allocated with precision, reinvested smartly and able to compound over decades?
Take Taiwan Semiconductor (TSMC). Massive capital needs and specialised expertise create a near-impenetrable moat. Billions in upfront costs and a steep knowledge curve keep competitors at bay.
Capitalism is harsh but fair: success attracts competition; failure invites disruption.
Research by the McKinsey Global Institute shows pharma, software and semiconductors excel at capital allocation and wealth creation. Utilities, telecoms and retail often lag.
Our philosophy is to focus on industries with minimal competition and leaders who allocate capital exceptionally well—echoing Buffett’s wisdom: “It’s better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Historically, wealth creation has been concentrated. “Just 2.4% of global stocks created $75.7 trillion of all wealth over the past 30 years.” Bessembinder, Arizona State University
But when you do think of Amazon or Apple, the rewards can be life-changing.
That means diversification and patience are essential. So is focusing on companies with durable moats and exceptional leadership.
Amazon’s dedication to its customers and Apple’s commitment to empowering individuals demonstrate the importance of mission, integrity and ethics. Buffett’s advice to “look for integrity first” remains critical.
Transparent, honest management builds trust and resilience. Greed and deception, like the Wirecard or Theranos founder Elizabeth Holmes scandals, destroy value fast.
We invest only in businesses we admire, led by people who treat their companies like their own.
Great investing demands multidisciplinary thinking. By connecting knowledge from physics, biology, history and psychology, these disciplines help avoid blind spots and reveal hidden connections.
Legends like Buffett and Munger use this broad lens for wiser decisions.
Investing in daily-use companies offers unique insights beyond spreadsheets. Paired with strong capital allocation, ethical leadership with significant skin in the game and sustainable advantages, this approach builds a portfolio poised to capture market-driving winners.
The YFS Intelligent Wealth Fund steers clear of fleeting trends and speculation. We only focus on disciplined businesses that are embedded in our daily life and that deliver lasting value to customers, employees and shareholders.
What companies do you use daily that fit this criteria?
Awet Ghirmay, Head of Investment Research
If you want to learn more about this topic, please find the link here.
More information about our fund can be found here: Hargreaves Lansdown or AJ Bell
Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
