Investing in family businesses could prove fruitful


Financial investors may want to consider the long-term rewards that investing in a family business could return.

An article by suggests that while family businesses may ignite thoughts of 'cronyism, internecine feuds and succession problems', data shows that listed companies where families have substantial shareholdings outperformed 'benchmark global indices' over the past five years.

That's based on a Credit Suisse Index of 225 family-dominated companies from around the world, which are outperforming 'MSCI World' by some eight percent since August 2007.

Furthermore, a third of all companies in Wall St's S&P 500 Index - as well as 40 per cent of the largest 250 firms in France and Germany - are defined as family businesses, cites

Michael O'Sullivan, head of portfolio strategy and thematic research at Credit Suisse Private Banking, believes that family businesses continue to be 'interesting' to investors.

He said: "If in the next five years, if there's a big rally in the high-beta stuff - banks, mining etc - then that would probably leave family businesses behind.

"But because private indebtedness remains so high and deleveraging will be likely continue to be severe for some time, family businesses should continue to be interesting as they tend not to be overleveraged and have that longer-term view," he added.

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