It's no secret that, with nearly one hundred and fifty years of history behind it, the investment company sector has a long and distinguished track record.
Interestingly, a number of AIC member investment companies retain their multi-generational connections with some of the families who remain major shareholders.
These families are actively involved in the investment company management through non-executive directorships and many were actively involved in their launch.
Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: "A number of AIC member companies have large family shareholdings and it is perhaps no coincidence that a number of these companies have a capital preservation strategy. It is clear, talking to many of these families, that some of this direct involvement is not just about the money, but about family history and with it a much wider sense of responsibility – and that makes for something distinctive."
But what does this mean for shareholders today? Alec Letchfield is Chief Investment Officer at Hansa Capital Partners, which manages a range of different portfolios including the listed fund, Hansa Trust. Hansa Trust has been closely associated with the Salomon Family since the 1950's with the Salomon family having a significant interest in the trust.
Alec Letchfield points out that having large shareholders, such as the Salomon family, ensure that there is a full alignment of interests with other, external investors: "I've spent 20 years in the investment management industry, working within larger, institutional groups which ultimately are focused on the growth of assets. At Hansa Capital Partners, our primary focus is on generating long-term performance with our biggest investor, William Salomon, sitting at the end of the room. It creates a real alignment of interests that is fundamental to everything we do. We are about multigenerational, long-term capital appreciation, with a long-term investment horizon which is not beholden to indices. The focus is on the preservation of capital, whilst at the same time putting money to work dynamically when opportunities present."
Personal Assets Trust was launched by the late and great Ian Rushbrook and was an investment vehicle in which he could consolidate, accumulate and protect his own family's wealth. With its mandate to protect and increase the value of shareholders' funds over the long-term, over the next 25 years he committed his entire heart and soul towards those objectives.
Frank Rushbrook, Ian's eldest son, was appointed as a non-executive director of Personal Assets Trust in July 2009 and, as at July 2015, is the largest retail shareholder in the trust. Frank Rushbrook said: "It is very much a family affair with my mother, my wife and children, sister, niece, nephew, aunt and cousins all being fellow shareholders. As you can imagine Personal Assets Trust really does have a personal connection for me and the sense of responsibility is all the greater for that.
"In my opinion a family connection on a shareholder register can be force for good in any company. Families provide continuity during periods of upheaval, can foster loyalty in a shareholder base, have longer-term investment horizons, are more risk adverse and have specific views on issues such as dividends. Being an investor in PAT is to join a family, a family of likeminded individuals who can take comfort in the fact that their interests are fully aligned with those of the board through a shared ownership of the company and its risks."
Frank Rushbrook gives an example of that 'continuity during periods of upheaval', commenting: "I was therefore in a position to represent and oversee the family's large interest at what was a very challenging period for the trust following the death of my father in October 2008, in the search for a suitable investment advisor culminating in the appointment of Troy Asset Management and the handover of chairmanship from Bobby White to Hamish Buchan."
Witan Investment Trust was launched in 1909 to manage the estate of the first Lord Faringdon Alexander Henderson. Whilst Witan formed what is today Henderson Global Investors in 1932, and sold its remaining stake in 1997, Harry Henderson is chairman of the company and has a significant shareholding.
Harry Henderson, chairman, Witan Investment Trust said: "The Henderson family has been involved in Witan in one way or another over the entire 106 year life of the Trust. Today the family's interest is relatively small as a percentage of the overall company but for some members of the family it still remains a core holding, as it is for me. The priority question for any director of a listed company is "are we acting in the best interests of shareholders?" and one is perhaps better reminded of the importance of this question as a Board member with responsibility for a meaningful family interest, particularly if one wants to survive family gatherings! The flexibility of an investment manager to take a longer-term view through a closed ended investment trust is certainly enhanced by a family using a trust as its long-term saving vehicle.
"Most of the strategic changes made over the years have been around positioning the trust in the best possible place for the future and being absolutely clear that shareholders come first, particularly by recognising conflicts of interest. I would like to think that any Board would think in the same way but the weight brought to bear by a family may just add the extra pound in this regard."
Brunner Investment Trust can trace its origins to the 1870's, when Sir John Brunner and Ludwig Mond set up Brunner Mond & Co. to produce chemicals for the cotton industry (it merged with three other companies in 1926 to become the chemical giant ICI). The following year the Brunner family chose to sell its ICI shares and establish a broad, long-term investment vehicle – the Brunner Investment Trust was formed. The Brunner family remain significant shareholders of the trust, holding about 30%. In addition, Jim Sharp, a non-executive director on Brunner's Board, is married to Isabel Mary Brunner who is the great granddaughter of Sir John Brunner who set up the Trust in 1927.
Jim Sharp, non-executive director, Brunner Investment Trust, said: "The extended Brunner family remains the largest shareholder in The Brunner Investment Trust and retains a role in its management via the Board. For the family the holding in the Trust provides exposure to global equity markets, a strong and sustainable yield and a commitment to dividend growth. This core shareholding provides a strong partner for the Trust and ensures it is able to take a long-term view on its investment strategy."
Majedie Investment Trust has a family holding of circa 53% and is held by a broad number of individuals. William Barlow, CEO of the company and a member of the family involved said: "The company became an investment trust in 1985 following the sale of rubber plantations in Malaysia. The family has benefited from the efficiency of a closed end structure that invests in a well-diversified global equity portfolio. The stable shareholding allowed the trust to take long-term views on investments such as the decision to seed and take a significant holding in the boutique asset manager Majedie Asset Management in 2002 which has assets under management of over £11bn as at 30 June 2015. The company retains a stake in Majedie Asset Management which manages the bulk of the assets. The Barlow family is actively involved through myself as CEO, but the rest of the Board are fully independent."
Caledonia Investments is a self-managed investment trust with net assets of £1.6bn, premium listed on the London Stock Exchange.
Acquired by the Cayzer family in 1951 as a holding company for their various shipping interests, Caledonia came into its own as an investment company in 1987. It still enjoys the backing of the Cayzer family, who collectively own some 48.5% of the share capital and from whom it derives its unique long-term investment horizon. The company's strategy is designed to grow capital and income by investing in both quoted and unquoted businesses with no time constraint. Caledonia's dividend, an important component for a family, has increased every year for the past 48 years. Caledonia has two Cayzer family members working in the business, the CEO William Wyatt and one of the main Board directors, Jamie Cayzer-Colvin, both of whom are great great grandsons of the founder. A further member of the family, Charles Cayzer, is a non-executive director.
RIT Capital Partners traces its origins back to the earlier Rothschild Investment Trust, which was originally associated with the family bank, N. M. Rothschild & Sons.
Jacob Rothschild joined the bank in 1959 and played a significant role in developing its business. In 1971 he was appointed Chairman of Rothschild Investment Trust which had a value of £5 million. In 1980 he left the bank to concentrate on developing the business of Rothschild Investment Trust, which was subsequently renamed RIT. At that time RIT was a listed investment trust with net assets of some £80 million.
RIT was subsequently built up through a combination of internal growth and acquisitions so that by the 1980's it had become an investment holding company, J Rothschild Holdings plc with assets of about £650 million. As a result of its acquisition of a number of financial services businesses during this period, the company no longer qualified as an investment trust and in 1988, J Rothschild Holdings plc demerged into two entities – J Rothschild Assurance which was subsequently renamed St. James's Place Capital plc and RIT Capital Partners plc.
RIT Capital Partners plc was listed on the London Stock Exchange with net assets of £281m. It is now one of the UK's largest investment trusts, with a market capitalisation of over £2 billion. Lord Rothschild remains as chairman. He and his family are the largest shareholders with a holding of 18%.