Carmignac Portfolio Family Governed is celebrating its three-year anniversary

Investing in family-owned companies presents a solid investment thesis as it aligns the owners’ and shareholders’ interests as they are themselves personally involved.

From a financial standpoint, we observe that family businesses outperform non-family businesses over time due to this ‘skin in the game’ effect. This leads to stronger motivation and commitment to the health of the business.

Carmignac Portfolio Family Governed relies on a dedicated analysis of family-owned companies. To do so, we have created our proprietary tool: the Carmignac Family 500 database, which screens for a universe of family companies using a rules-based approach. It is supplemented by a qualitative screen to confirm family cross holdings. Carmignac 500 benefits from a rich series of data from a long period of time. This 15-year history of family company returns allows us to identify relevant factors for family company performance. The specific point we look at within these companies is understanding the difference between control and ownership. We focus on founder or family control of the company. While ownership is an important consideration, we believe that the level of control is the most important to evaluate the family’s ‘skin in the game’.

We are focusing on family companies as, at Carmignac, we share common values: human-driven insight, entrepreneurial spirit and active commitment. Being a family business ourselves, this puts us in the best position to understand and anticipate the strategy of the companies’ management.

Carmignac benefits from a strong history, and 30 years of investment experience has taught us vigilance. As Governance is a key dimension of family businesses, our dedicated governance analyst is a strong asset for pre-investment deep-dives and governance-related investment recommendations, but also to monitor portfolio holdings.

In our effort to have a positive impact regarding Governance, active ownership is also very important at Carmignac. Our engagement policy helps to identify areas of improvement to the Governance analyst who engages directly with the company to seek to effect change.