Trust: the most valuable asset you can't see on a balance sheet

It feels like we're living through an age of disappointment. University fees have risen steadily while graduates wonder whether they paid first-class prices for an economy-class experience.

Buying Taylor Swift tickets can feel less like purchasing entertainment and more like participating in a stress test of modern capitalism. And many women still discover that navigating parts of the healthcare system requires persistence levels associated with elite endurance athletes.  

Perhaps it's no surprise that trust is wearing thin. We are asked to pay more, wait longer and tolerate worse service, while being told the system is working exactly as intended. Yet our need for trust hasn't disappeared. We still expect our salaries to arrive on time, our payments to go through, our medicines to be safe, and our purchases to do what they claim on the box.

This leads me to wonder: if trust is becoming scarcer, it is becoming more valuable? Investors often talk about economic moats – the durable advantages that allow companies to defend their market position over time. In a world where trust feels increasingly rare, perhaps trust itself is becoming part of that moat.

Trust as an economic moat

Customers remain loyal to brands they trust, and networks only retain their value if users trust them to work reliably. 

Companies that consistently do what they say they will, treat stakeholders fairly and behave predictably are doing more than selling products or services. They are building trust. Over time, that trust can strengthen customer loyalty, support pricing power, reinforce network effects and make competitive advantages more durable.

We can see this dynamic playing out across a range of industries. Sometimes trust reinforces an existing competitive advantage. Sometimes its loss exposes how fragile an advantage really was. Four case studies below capture the value of trust for companies and customers.

Chart 1:  Four case studies on trust

Why trust reduces friction

To better understand the value of trust from an investor’s perspective, I reached out to our Head of Global Equities, Paul Schofield. I asked a simple question: does trust really matter financially?

Paul’s answer was immediate: “At its simplest, trust reduces friction.”

The more I thought about it, the more that resonated. When trust is low, everything becomes more expensive. Contracts get longer, oversight increases and stakeholders demand greater reassurance. When trust is high, relationships work more smoothly because not every interaction starts from a position of suspicion.

If trust is becoming part of a corporate moat and recognised a durable advantage that allow companies to defend their market position over time, how can investors assess it?

If trust is becoming part of an economic moat and recognised a durable advantage that allow companies to defend their market position over time, how can investors assess it?

Trust is difficult to observe directly. It rarely appears in financial statements, but it often leaves traces in stakeholder behaviour long before it affects earnings. Therefore, investors can look for behavioural indicators among the stakeholders a company depends upon.

How investors can assess trust

Thinking about trust as part of a moat led me to develop a simple trust dashboard. No single metric can tell an investor whether a company is trustworthy and trusted by customers. What matters is the overall picture. Viewed together, these indicators can help investors assess whether stakeholder confidence in a company is strengthening or weakening over time.

Chart 2: A trust dashboard for investors

The inherent value of trust

I began with a simple observation: people seem to trust institutions less than they once did. If trust is becoming scarcer, then perhaps it is becoming more valuable too. For companies, that value may increasingly show up in customer loyalty, employee engagement, regulatory relationships and the resilience of their competitive advantage. Trust doesn't appear on the balance sheet. Yet it may be one of the most important assets determining what eventually does impact a company financially.

For professional investors only. This material is not suitable for a retail audience. Capital at risk. This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.