FOCUSING MORE ON LONG TERM RESILIENCE

THAN ON SHORT TERM PERFORMANCE

The 10 largest family businesses in the world have combined revenues of more than $1.7 trillion. This would make them the 12th biggest global economy if they were a single country. Some of the largest and globally relevant family businesses are Wal-Mart, Samsung, Roche, BMW and L’Oréal which are renowned for enduring wealth creation over generations. Family businesses dominate the productive structure of the global economy and account for more than 30% of companies with sales in excess of $1 trillion.

With listed family businesses, the unique ownership structure results in capital allocation decisions being focused more on long term resilience than short term performance. Family businesses tend to be more flexible and responsive to threats and opportunities than non-family businesses and twice as likely to replace non-performing management. Given their focus on resilience, family businesses are better prepared for down-turns with leaner structures and stronger financial structures and thus able to invest through the cycle to emerge stronger post recessions. As a result, they deliver superior capital allocation with lower fundamental risk which enables consistent outperformance over time.

Furthermore, the corporate governance standards associated with being a listed entity prevents the family from potentially abusing their control over the business. This makes listed family businesses a compelling universe for the long term investor.

Wisian-Global-Family-Business-fund

Therefore, our and numerous research studies have found that this enables family businesses to generate significantly higher earnings growth than the global market but this phenomenon is seen on more granular level across continents and on a country basis. The strong capital allocation and earnings growth results in Return on Capital Employed being 60% higher than non-family businesses. Therefore, this results in superior shareholder returns which widens after each recession due to the resilience of family businesses.

Wisian Capital’s Global Family Business Equity Fund was created to take advantage of a powerful phenomenon within global equities which consists of long term focused and resilient family business.

Family businesses are classified as having at least one of the following characteristics:

1) more than 25% of ownership is held by a single family;

2) a willingness to transfer ownership to the next generation; and

3) at least one family member is fully engaged in management or at board level.

Our partner on this fund is March Asset Management of Spain. March AM is part of Banca March, the largest family owned private bank in Spain founded in 1926. The UCITS compliant fund is US Dollar denominated and registered in Ireland.

FUND FACT SHEETS