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The innovative German index provider Solactive announced the release of the Solactive Swiss Family Owned Companies Index, an index tracking the price movements of publicly traded family-owned companies that are domiciled and listed in Switzerland. The index is used as the basis for UBS’s tracker certificate (ISIN: CH0350101744).
Family-owned companies are defined in the index as those in which the family ownership stake is of at least 32%. In addition, companies require a minimum threshold of CHF 500,000 for the 3-month average daily traded value to be included as components.
The index targets investors that are interested in gaining exposure to the potential benefits associated with this type of ownership structure. Academic research has found that family-owned businesses can show better returns over the long-term and higher resilience during economic downturns compared to non-family ones. These results can be explained by the fact that strategic decisions of family-owned businesses tend to be influenced by longer-term goals, incentivized by the desire of handing control to the next generations. In addition, there is evidence showing that family-owned companies tend to have more conservative capital structures with lower levels of leverage. In turn, these businesses bear a lower risk of default, which can partly explain the better results recorded during periods of recessions.
Henning Kahre, Head of Research, Solactive AG, commented:
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, said:
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 9 constituents weighted according to inverse volatility and the composition is rebalanced quarterly. The target weight per component is capped at 20%.
In addition, the target weight of any security exhibiting a 3-month ADTV lower than CHF 2 million is capped at 5%. Any excess weight is redistributed proportionally across the remaining securities. Historical data will be maintained from the 9th of January 2017.