Osmosis Updated Equity Factor Models

New investment models now account for research and development spending as a key asset to better capture value.

Updated on Oct. 1, 2026 in Investing

Bold flat-color editorial illustration featuring a vertical stack of geometric blocks in navy and cream, symbolizing financial asset capitalization. — Osmosis Investment Management has updated its equity factor models to classify research and development spending as a long-term asset. AI Illustration. Upload story photo >

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Is now a good time to prioritize companies with high research and development spending?

Osmosis Investment Management has revised its equity factor definitions to treat research and development spending as an asset rather than a cost. This change informs the 48 new iSTOXX Osmosis Multi Factor Transition indices launched in collaboration with STOXX.

Why it matters

Traditional financial models often overlook the value created by R&D, which has become an increasingly significant portion of spending for U.S. companies since the mid-2000s. By adjusting how this spending is captured, the firm aims to better reflect corporate financial risk and long-term value creation.

Osmosis Investment Management oversees $17 billion in assets, or approximately €15 billion. The firm recently launched 48 new iSTOXX Osmosis Multi Factor Transition indices to implement these updated factor calculations.

The players

Osmosis Investment Management

An asset management firm overseeing $17 billion that focuses on resource efficiency and equity factors.

STOXX

A provider of global index solutions that partnered to launch 48 new financial indices.

The details

The firm adds accumulated R&D expenditure back into investment calculations to address the disconnect between traditional accounting and modern value creation. This model integrates a resource efficiency measure that analyzes carbon emissions, water use, and waste per unit of revenue. These metrics are designed to help investors identify companies better positioned to navigate regulatory charges and rising financing costs.

Mid-2000s: R&D spending began rising significantly relative to production costs among U.S. companies.
Past 18 months: Osmosis engaged with pension funds to test these new factor definitions.
October 1, 2026: The indices and updated factor models were officially launched.

Money Landscape

This shift marks a departure from traditional accounting methods that historically categorized R&D strictly as an operational cost. It aligns with broader trends in equity analysis that seek to better account for the long-term impact of intangible assets on corporate financial risk.

Investors may see these new indices integrated into institutional portfolios and retirement products that track updated factor-based strategies. If you are reviewing your investment allocations, speak with a qualified financial professional about how factor-based methodology changes might impact your portfolio risk.

The takeaway

The move highlights the growing importance of accounting for intangible assets like research and development when assessing corporate quality. Investors should track how factor-based index strategies influence the risk profiles of the funds they hold in their long-term portfolios.