Pictet launches Family focussed fund
The fund invests in family owned businesses, which tend to outperform the broader global equity market and display distinctive management styles which are attractive to long-term investors: strong values and active ownership, including a heightened long-term focus combined with succession planning.
According to a variety of studies, family-owned businesses are typically more profitable and outperform their non-family owned peers. Successful firms in this space have four key dynamics at play in common:
- Entrepreneurship - often through distinctive innovation or disruption;
- Careful stewardship – understood as the desire to invest now for the success of the next generation – and, no generation wishes to be the one who gambled the family silver;
- Socio-emotional wealth “skin in the game” – the company is a reflection of them and the family reputation. Consequently, they are engaged, active owners and this can be seen through their financial commitment; and
- Longer-term perspective – given family owners often have the vast amount of their wealth tied up in the business, how they act and invest is very different to shareholder led firms. They typically reinvest for growth, while maintaining stricter financial discipline.
The fund is managed by a team based in Geneva, co-managed by Alain Caffort and Cyril Benier. A family business is defined as a listed company where a person, often the founder, or a family hold a minimum of 30% of voting rights. This provides an investment universe of around 500 companies globally.
“Despite the fact that founder or family-controlled companies represent almost 20 per cent of the MSCI ACWI index, we found that there were very few investment approaches giving investors the opportunity to capitalise on the prominence and strengths of family businesses – especially within a global equity strategy. The Pictet-Family fund aims to fill that void” comments Alain Caffort, Senior Investment Manager, Pictet-Family fund.