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Relative returns

Family companies have historically performed well in times of market stress – but they have their own vulnerabilities
Relative returns
  • Family businesses often benefit from a long-term focus and disciplined investment
  • An intensifying focus on ESG means that there is more onus on maintaining strong internal standards and protecting minority shareholders

The subject of family has pervaded this year’s Covid-19 saga. Virus-induced restrictions have pulled siblings, parents and grandparents apart – unable to laugh, hug, cry or grieve together because of the threat of infection. But for many people, family has also been central to getting through the pandemic – representing a beacon of stability and comfort amid the uncertainty.

Steadiness in tough times is also a trait associated with family businesses, too – underpinned by a long-term focus, alignment between the interests of bosses and shareholders, and prudent capital allocation. And that’s before the propensity of listed family businesses to outperform their peers. Indeed, a recent report from Credit Suisse showed that its database of more than 1,000 family-owned companies had beaten other stocks by an annual average of 3.7 percentage points since 2006.

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