Family businesses are characterized by their long-term vision, loyalty, motivation and low indebtedness. There are funds specialized in this type of company.
A family business is one in which an individual or family group owns at least 20% of the company’s shares and in which at least one member of the family is present on the Board of Directors. They are characterized by their long-term vision, loyalty, motivation and low indebtedness. They often reinvest a higher proportion of profits than their peers, with strict financial discipline.
Credit Suisse has developed the CS Family 1,000 index, which analyzes the 1,000 most representative family businesses in the world. His studies consistently find that family businesses offer higher levels of profitability and higher revenue growth in all regions, particularly in Asia, due to the longer time horizon of their investment strategy.
In addition, according to other studies, these companies tend to be smaller, trade at a discount, beat the local indices of their markets, are capable of generating more profits with their assets and access financing at a lower cost.
The investor who wants to participate in this type of company has several options. He can buy shares in, for example, BMW, Samsung, LVMH, L’Oreal, or Spain’s Inditex and Prosegur. And those who want greater diversification can choose between the offer of specialized funds in family businesses that are marketed.
March International- The Family Business is a Luxembourg-domiciled fund of Banca March that invests in family businesses that represent a good buying opportunity. Managed by Javier Pérez and Antonio López, the fund has a marked value bias and includes ESG criteria in the analysis and valuation of the companies. Although this year it is in losses, like the rest of the funds in the category, it accumulates an average annual return of 5% in the last three years.
Its main positions include Berkshire Hathaway (the investment arm of Warren Buffett), Oracle, Alphabet, Roche, Samsung Electronics, Thai Beverage and the Spanish Prosegur Cash.
The Belleuve Asset Management boutique has several funds that invest in this type of company managed by Birgitte Olsen. The BB Entrepreneur Swiss Small
With an average return of 5.78% over the last three years, the Bellevue Sustainable Entrepreneur Europe invests in companies across Europe, such as Mowi, the world’s largest salmon producer; Carrefour; French digital services company Sopra Steria; Novo Nordisk and Publicis Groupe.
Finally, the Bellevue Entrepreneur Europe Small, in which, in addition to Sopra Steria, the titles of Ipsos, Subsea 7, Bakkafrost and Nexans stand out in its portfolio. It accumulates an annualized return of 9.52% in the last three years.
The Carmignac Euro-Entrepreneurs, of the French manager founded by Edouard Carmignac, invests in companies in which the founders or shareholders are involved in the management of the company. Its three-year average annual return is 4.79%.
The main positions of its manager, Malte Heininger, are the chemical IMCD, the semiconductor firm ASM, the German pharmaceutical Dermapharm and the Austrian catering firm Do
The CS Family Business, of Credit Suisse Management, has no geographical, sector or market capitalization restrictions. With a low turnover of the portfolio, its manager, Javier Suescun, looks for family companies that have sustainable competitive advantages, with hidden value, that are in the process of restructuring or that are leaders in their sectors. The fund has obtained an average return of 6.12% over three years.
Among the companies that stand out in the portfolio is the Canadian supermarket chain Alimentation Couche-Tard; the Portuguese paper company The Navigator Co (formerly Portucel Soporcel); Buffett’s investment holding company Berkshire Hathaway; and chocolate maker Barry Callebaut.
Lombard Odier’s LO Funds – Continental Europe Family Leaders is managed by Arnaud d’Aligny, who has posted an average three-year return of 12%. Among his positions stands out the Italian supplier for the metal industry Danieli
BLI-Banque de Luxembourg Investments has the BL-European Family Businesses fund, which invests in some 60 listed European family-owned companies, selected based on criteria such as their competitive advantages, profitability, business strategies and valuations. Three years later, he earns an average of 4.30%.
Among the European family companies that form part of the portfolio of Ivan Bouillot, manager of the fund, are the firm specialized in animal health Virbac, Warehouses de Pauw, EssilorLuxotica and the company of air conditioning products Belimo.
One of the latest managers to launch a fund of this type is Pictet, with its Pictet-Family, which invests in listed companies in which at least 30% of the voting rights correspond to an individual, often the founder or the family. Managers Alain Caffort and Cyrril Benier have no geographic, sector or size preferences, unless the shares have a minimum daily liquidity of $5 million.
The fund integrates socially responsible criteria in determining the weight of each company in the portfolio, where the governance criterion is particularly relevant. The final portfolio is made up of 40-60 companies and shows a greater weight in consumer discretionary than the MSCI ACWI index, including large luxury goods companies. Among its bets are Hermes, LVMH, ArcelorMittal, Estée Lauder or EssilorLuxotica.
