Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 374

Family businesses show resilience through pandemic

Our research highlights that family/founder-owned businesses pursue a longer time horizon in their investment strategy, delivering more stable and superior through-cycle profitability, and ultimately driving significant excess returns for all shareholders.

Using a proprietary ‘Family 1000’ database of more than 1,000 publicly-listed family or founder-owned companies, Credit Suisse has found that since 2006, the overall ‘Family 1000’ universe has outperformed non-family-owned companies by an annual average of 3.7%. Asia Pacific (APAC) ex-Japan has seen the most pronounced effect, with compound excess returns of more than 5% per annum, followed by Europe, at 4.7% basis points.

Within APAC, Australia has the highest excess return.

APAC family-owned companies continue to dominate the universe

The report covered 12 markets in APAC including Japan that continue to dominate and represent a 51% share of the universe, with a total of 540 companies and a market capitalisation of over USD5.56 trillion.

The universe includes six Australian family-owned companies, with a total market capitalisation of USD63.3 billion. They are Fortescue Metals Group, Crown Resorts, TPG Telecom, 7 Group Holdings, Flight Centre and Wisetech Global. 

Within the region, China, India and Hong Kong dominate. These three jurisdictions combined comprise 63% of the APAC universe of the CSRI’s database, with a combined market capitalisation of USD3.9 trillion (or 70%) of the market share of the APAC universe.

Source Figures 1–2: Credit Suisse Research, Thomson Reuters Datastream

The family alpha is strongest in Australia, with an annual average outperformance of 23% since 2006, compared to 12.0% by their Chinese peers and 9% by their Japanese peers.

However, the universe of Australian and Japanese family-owned companies makes up only a small portion of the overall universe.

Family alpha factor during the COVID-19 pandemic

The COVID-19 pandemic has had a significant impact on equity market returns and volatility this year. Family-owned companies tend to have above-average defensive characteristics that allow them to perform well, particularly during periods of market stress.

Return data for the first six months of this year supports that view, given an overall outperformance of around 3% relative to non-family-owned companies. This outperformance was strongest in Europe and APAC ex-Japan, at 6.2% and 5.1% respectively. Family-owned companies in Japan outperformed their non-family-owned peers by 30.1% during this period.

Source: Credit Suisse Research, Thomson Reuters Datastream

Key findings on family-owned companies

Higher growth and profits – The analysis suggests that, since 2006, revenue growth generated by family-owned companies has been more than 2% higher than that of non-family-owned companies for both smaller and larger companies. At the same time, the analysis also suggests that family-owned companies tend to be more profitable. These superior returns are observed across all regions globally.

Perform better on ESG scores – Family-owned companies on average tend to have slightly better environmental, social and governance (ESG) scores than non-family-owned companies. This overall superior performance, which has strengthened over the past four years, is mostly led by higher environmental and social scores as family-owned companies appear to lag their non-family-owned peers in terms of governance. From a regional perspective, European family-owned companies have the highest ESG scores. Family-owned companies in APAC ex-Japan are scoring better than those located in the US and their scores are rapidly converging with those generated by their European counterparts.

Older family-owned companies have better ESG scores than younger firms – This performance is seen across all three ESG areas. Perhaps the fact that older family-owned companies have more established business processes in place allows them to incorporate or focus on areas of their business that are not directly related to their production processes, but that are relevant in terms of maintaining overall business sustainability.

COVID-19 impact – In order to better understand the ESG characteristics of family-owned companies, a survey of more than 200 companies was conducted. The companies were asked how much of a concern COVID-19 is to them going forward. Despite the impact on revenue growth this year, it seems that the family-owned companies surveyed view COVID-19 as slightly less of a concern to their firm’s prospects than non-family-owned companies. Family-owned companies have also resorted less to furloughing their staff than non-family-owned companies (46% versus 55%). Among family-owned companies, support programs have been set up most often in APAC Ex-Japan rather than in Europe or the US. This might reflect a greater availability of government-sponsored support programs in these regions.

Social impact – The survey showed that while family-owned companies have focused more on social policies since the outbreak of the COVID-19 pandemic, they seem to lag non-family-owned peers on several ESG-related factors, most noticeably human rights and modern slavery-related policies. Family-owned companies on average have less-diverse management boards, fewer of them have support groups for the lesbian, gay, bisexual and trans (LGBT) and black, Asian and minority ethnic (BAME) communities, or have made public statements concerning respect for human rights or the related United Nation principles.

The largest 25 family companies in the database are:

Andrew McAuley is Chief Investment Officer for Credit Suisse Australia Private Banking. This article is general information and does not consider the circumstances of any investor.

A copy of the full report can be found here.

 


 

Leave a Comment:

RELATED ARTICLES

Lessons from the rise and fall of founder-led companies

Chemist Warehouse founder reveals his success secrets, Part 2

Chemist Warehouse founder reveals his success secrets

banner

Most viewed in recent weeks

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Welcome to Firstlinks Edition 606 with weekend update

The boss of Australia’s fourth largest super fund by assets, UniSuper’s John Pearce, says Trump has declared an economic war and he’ll be reducing his US stock exposure over time. Should you follow suit?

  • 10 April 2025

4 ways to take advantage of the market turmoil

Every crisis throws up opportunities. Here are ideas to capitalise on this one, including ‘overbalancing’ your portfolio in stocks, buying heavily discounted LICs, and cherry picking bombed out sectors like oil and gas.

An enlightened dividend path

While many chase high yields, true investment power lies in companies that steadily grow dividends. This strategy, rooted in patience and discipline, quietly compounds wealth and anchors investors through market turbulence.

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

Getting rich vs staying rich

Strategies to get rich versus stay rich are markedly different. Here is a look at the five main ways to get rich, including through work, business, investing and luck, as well as those that preserve wealth.

Latest Updates

Investment strategies

Getting rich vs staying rich

Strategies to get rich versus stay rich are markedly different. Here is a look at the five main ways to get rich, including through work, business, investing and luck, as well as those that preserve wealth.

Investment strategies

Does dividend investing make sense?

Dividend investing offers steady income and behavioral benefits, but its effectiveness depends on goals, market conditions, and fundamentals - especially in retirement, where it may limit full use of savings.

Economics

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

Strategy

Ageing in spurts

Fascinating initial studies suggest that while we age continuously in years, our bodies age, not at a uniform rate, but in spurts at around ages 44 and 60.

Interviews

Platinum's new international funds boss shifts gears

Portfolio Manager Ted Alexander outlines the changes that he's made to Platinum's International Fund portfolio since taking charge in March, while staying true to its contrarian, value-focused roots.

Investment strategies

Four ways to capitalise on a forgotten investing megatrend

The Trump administration has not killed the multi-decade investment opportunity in decarbonisation. These four industries in particular face a step-change in demand and could reward long-term investors.

Strategy

How the election polls got it so wrong

The recent federal election outcome has puzzled many, with Labor's significant win despite a modest primary vote share. Preference flows played a crucial role, highlighting the complexity of forecasting electoral results.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.