Nike, L’Oreal, Hermès — why I’m investing in family firms

In 1948, 30 years after founding the shoemaker Geda, the brothers Adolf and Rudolf Dassler fell out, shuttered the firm and set up their own competing businesses, Adidas and Puma. More than 70 years on, the bitter rivalry between the two giants of the sportswear market continues. But both have delivered impressive returns for their shareholders.

The Dassler feud highlights the risks of investing in family-owned businesses, yet many fund managers believe they can be some of the best investments. A family-owned company may have a founder as chief executive or chairman, and the largest shareholder, such as Mark Zuckerberg, the founder of Facebook, who is the chief executive and largest individual shareholder of its parent company Meta Platforms.

If it’s an old company it’s