Germany based index provider Solactive has launched a new index offering access to the performance of companies that are mainly owned by families. The Solactive Global Family Owned Companies Index specifically looks at the positive effects of certain ownership structures on the long-term development of a company.
Steffen Scheuble, CEO of Solactive
The index is based on global research by the University of St. Gallen, which lists the 500 biggest companies by revenue, where families hold at least 32% of the voting rights. Out of this universe all listed companies at a regulated and approved stock exchange are further considered as components for the index. All stocks whose market capitalization is greater than $1bn and whose average daily value traded over the last three months equals or exceed $10mn are eligible for the index. Out of this selection the Top 50 companies with the lowest volatility (12-month volatility) are chosen for the index and are weighted by inverse volatility with a cap of 5%.
Research from UBS shows that family owned companies are able to plan and act sustainably as they are engaged in the company in a long-term manner. Their experiences and traditions that often reach back several decades can support decisions in the long-term as well as in the short-term. They also continuously invest higher amounts in e.g. research than other companies, which positively influence their profitability as well as sustainable success. This is evidenced by the stock performance of family owned companies beating their peer group over the last ten years with a good outperformance and a significantly better yield/risk ratio.
Steffen Scheuble, CEO, Solactive, said in a statement: “By launching the Solactive Global Family Owned Companies Index we introduced another index that is focused on the long-term development of a company. Investors can now participate in the positive influence of family ownership and follow a sustainable and attractive yield/risk ratio.”
Robin Lemann, Head of UBS Public Distribution Switzerland, added: “Tracker certificates on the Global Family Owned Companies Index open another niche market to the investors. That way they can participate in the development of global family owned firms with just one product. Thanks to its dynamic index methodology it is assured that the index is regularly adjusted to the newest market environment.”
Thibault Scaramanga, Head of Barclays EFS Solutions France, Barclays, also said: “For most of us, family controlled companies are intuitively synonymous with fundamental wealth creation based on long term management, strong value foundations and capital preservation. The Solactive Global Family Owned Companies Index offers simple access to family firms on a worldwide and diversified basis. Although the index construction is simple, in historical simulations the index substantially outperformed its benchmark over the last 10 years while showing a lower volatility. This is perhaps not a surprise when considering the abundant literature on the value of family controlled companies.”
The index is available as a Net Total Return Index as well as Price Return Index and is calculated in EUR, CHF and USD. It will be weighted quarterly. The index is also licensed to UBS for open ended certificates in Switzerland and Barclays for products in France.
This is the third index Solactive has launched this month and follows a euro sustainable bond index and a low carbon fixed income index.