Solactive has introduced an index that focuses on tracking the price movements of publicly traded family-owned companies that are based and listed in Switzerland.
The companies are defined as those in which the family ownership stake is at least 32%. In addition, companies require a minimum threshold of CHF500,000 for the 3-month average daily traded value to be included as components.
The index targets investors that are interested in gaining exposure to family-owned companies, which studies have suggested can provide better long-term returns. This is put down to their ability to support business decisions in the long-term as well as in the short-term.
In addition, there is evidence suggesting these companies tend to have more conservative capital structures with lower levels of leverage. In turn, they bear a lower risk of default, which can partly explain the better results recorded during periods of recessions.
Henning Kahre, head of Research, Solactive, said: “Following the successful launch of the Solactive Global Family Owned Companies Index, we want to offer the possibility to invest in the same index concept with a country-specific focus. We partnered up with UBS to provide a product allowing investors to get direct exposure to that subset of the Swiss market.”
Robin Lemann, head UBS Public Distribution Switzerland, added: “Due to the good demand for the tracker certificates on the Global Family Owned Companies Index, launched at the end of 2015, we decided to increase the product offering within this theme. With the offering on the Swiss Family Owned Companies Index we enable investors to invest into this theme with regional focus. That way they can participate in the development of Swiss family owned firms with just one trade. Thanks to its dynamic index methodology the index is regularly adjusted to the newest market environment.”
The Solactive Swiss Family Owned Companies Index is calculated as a price return and net total return index denominated in CHF. The index is currently composed of nine constituents weighted according to inverse volatility and the composition is rebalanced quarterly. The target weight per component is capped at 20%. Also the target weight of any security exhibiting a 3-month ADTV lower than CHF2m is capped at 5%. Any excess weight is redistributed proportionally across the remaining securities.