BNP Paribas has launched open-end tracker certificates on the Six Swiss Exchange with a new underlying from Solactive – the Solactive Founder-Run Index. The index was designed to represent the performance of companies which are still managed by their founder, based on equal weighting. “BNP Paribas has listed open-end certificates on the Founder-Run Companies Index both in Germany and in Switzerland,” said Ludwig Lewicki, senior officer, exchange-traded solutions at BNP Paribas in Switzerland.

The product which is listed on the Stuttgart and Frankfurt stock exchanges is euro-denominated while on Six Structured Products it is available in Swiss francs, euros and US dollars. “We launched the trackers in different currencies to reflect the multiplicity of investors in Switzerland,” said Lewicki. “The certificates are not only targeted at retail investors, but rather at ‘self-directed investors’ who realise the potential of that index.”

The index constituents span Canada, Hong Kong, Japan, Netherlands, Switzerland, the UK and US and a wide variety of industries, such as technology services, finance, retail, consumer goods, healthcare and transportation. “Research from Rüdiger Fahlenbrach of The Ohio State University highlights that founder-run companies are often managed by brilliant, passionate CEOs willing to spend their career innovating in a specific sector or business area and make a difference in the long-run,” said Steffen Scheuble (pictured), chief executive officer and founder of Solactive. “This typical long-term vision can be quite far, if not opposite, from short-term profit-oriented CEOs and thus can lead to outperformance over several years or decades.

“The index selects stocks globally, nevertheless the majority of companies are domiciled in the US, which reflects well the founder spirit of American residents,” said Scheuble. To be eligible for the index, stocks must have a minimum market capitalisation of US$1bn, as well as an average trading value of US$1m over the previous three months. The stocks selected as final, equally-weighted components are the top 30 companies in terms of market capitalisation, whose current CEO was also the original founder. Well-known names currently included are, among others, Netflix (consumer services), Amazon (retail), Blackrock (finance), Google (information technology) and FedEx (transporting).

“The exchange-traded tracker certificates provide investors with simple and diversified access to shares of founder-run businesses,” said Lewicki. Index trackers have been used in the past to test new strategies, which can afterwards attract demand for other type of structures, including ones with capital protection. “So far we haven’t planned to launch new structured investment opportunities with partial or full capital guarantee on this index, but it may be subject to further development.”

Scheuble said: “Past performance has shown that founder-run companies are able to generate superior returns compared with the market. For 2015, we do not have a specific expectation, since the outperformance of the index is expected to emerge with over a longer-term horizon.”

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