Solactive launches index tracking Swiss family owned companies

Jan 31st, 2017 | By | Category: ETF and Index News

Solactive has launched the Solactive Swiss Family Owned Companies Index, tracking the price movements of publicly traded family-owned companies that are domiciled and listed in Switzerland.  Although not currently available in ETF form, the index is suitable for the creation of structured products and has been licensed to UBS for an index-tracking certificate

Solactive launches Swiss family owned companies index

The Solactive Swiss Family Owned Companies Index currently tracks the inverse volatility-weighted performance of nine Swiss firms with greater than 32% ownership controlled by a single family.

The new offering from Solactive follows from the successful launch of the Solactive Global Family Owned Companies Index in March last year. Powering the methodology behind these indices is 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.

Family-owned businesses may show better returns over the long-term and higher resilience during economic downturns compared to non-family ones. Proponents of this theory argue that strategic decisions of family-owned businesses tend to be influenced by longer-term goals, incentivized by the desire of handing control to future generations. This is often seen in greater investment amounts committed to research and development.

In addition, there is evidence showing that family-owned companies tend to have more conservative capital structures with lower levels of leverage leading to a lower risk of default during periods of recessions.

To be eligible for inclusion in the index constituents must have a 3-month average daily traded value (ADTV) of CHF 500,000 and must be defined as a family-owned company (family ownership stake is of at least 32%).

The index is calculated as a Price Return and Net Total Return Index denominated in Swiss francs. The nine current constituents are weighted according to inverse volatility with future rebalancing to be done on a quarterly schedule. Constituent weights are capped at 20% while those with a 3-month ADTV lower than CHF 2 million are capped at 5% at the time of rebalancing.

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