Join our community of smart investors

Relative returns

Family companies have historically performed well in times of market stress – but they have their own vulnerabilities
October 29, 2020
  • 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.

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL trial

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Have an account? Sign in