German index provider Solactive has created an index that aims to capture returns from family-run businesses, which researchers say have certain superior characteristics to other companies.
Solactive created the index after UBS research showed family-owned companies were able to plan and act sustainably as their owners made longer term decisions and invested higher amounts in research than other companies, which positively influences their profitability.
In simuations, the index outperformed its benchmark with lower volatility in each of the last ten years, Solactive said.
The 500 stocks the index could hold are the biggest companies by revenue which have at least 32% family voting rights, but out of this universe stocks with a capitalisation under $1 billion (€0.88 billion) are eligible.
Fifty companies with the lowest volatility on a 12-month basis are ultimately selected and weighted inversely according to their volatility.
The index is calculated in euros, Swiss francs and US dollars and rebalances quarterly.
This is the third index launched by Solactive this month, following a euro sustainable bond index and a low carbon fixed income index.
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