Finance Recommended

Most family-linked investment groups underperform

The share performance of listed family investments groups hasn't been great in the last year Photo by jmiks/iStock / Getty Images
The share performance of listed family investments groups hasn’t been great in the last year Photo by jmiks/iStock / Getty Images

Listed family businesses are often said to outperform their non-family counterparts when it comes to their share performance. There’s plenty of data to back this up. But when it comes to the performance of family-controlled investment groups their results aren’t quite as good, at least in the short term. Indeed, in the last year most of them have underperformed indexes by a long way.

The benchmark family business index – the Credit Suisse Family Index – is down year-to-date in euros (March 9th) by 3.8% and by 5.3% in the last year. That’s OK compared with the S&P 500, which is YTD down 2.7% and 2.4% in the year, but by no means great.

Family Investment Houses Underperform

Share price performance in local currency terms YTD (March 9) & 1 Year

But, compared with the performance of  family-listed investment funds, the story for the family sector isn’t so pretty . Exor, the Milan-listed investment group of the Agnelli family, is down a massive 29.3% YTD and 23% in the last year. Wendel, the Paris-listed investment house of the Wendel family, is down 19% YTD and 18.2% in the last year. Kingdom Holdings, the Saudi-listed investment office of Prince Alwaleed Bin Talal and his family, is down a massive 38.3% in the last year, and 18.9% YTD. All percentage changes have been calculated in their local currency.

And the rout appears pretty universal. Investor AB, the Stockholm-listed investment vehicle of the Wallenberg family is down 7.4% YTD and 8.8% in the last year. RIT Capital, the London-listed investment group of Jacob Rothschild is down 6.5% YTD and 5% in the year. Loews Corporation, the New York-listed investment group of the Tisch family, is down 4.9% YTD and 9.7% in the year. Although it’s not all bad news for family investment groups, Caladonian Investments, the London-listed group of the Cyzer family, was down just 0.6% in the last year, although the YTD figure wasn’t quite as good, down 5%.

The one that stood out in performance terms was Berkshire Hathaway, although whether it would say it is a family-controlled investment group is a different matter. Berkshire was up nearly 5% YTD, although down the same amount in the last year.

It must be stressed that the performance of all of these groups was much better over a long time period. And no doubt all of them would say that is the main reason to buy their stock – to take advantage of their long-term investment philosophy. Nevertheless, when markets are underperforming, as they are now, to follow the old adage of holding onto quality and long-term value-oriented stocks like family investment groups might not be as reliable as in the past.

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