The recent UCITS fund launch by London-based J. Stern & Co. could be said to mark somewhat of a turning point in the evolution of the firm. Continuing the legacy of the historic European Stern banking family, J. Stern & Co. has had an illustrious 200-year history. The family office for the French branch of the Stern family was originally based in Paris and later in Geneva.
Three generations on, in 2012, Jerome Stern and Christopher Rossbach co-founded the London-based asset management firm to manage the family’s investments as well as external client assets.
Until recently, all J. Stern & Co.’s clients had separate managed accounts, the underlying ethos being that the Stern family and its clients preferred to own their assets directly.
Therefore, the recent decision to launch a UCITS fund – the World Stars Equity Strategy fund – appears to be a shift in direction. The firm is also in the process of launching a second fund for a multi-asset income strategy
However, Rossbach explains that many investors, be they UHNWs, trustees or even institutional investors have told them they prefer to invest in UCITS funds. For instance, in some European countries there are tax reasons for a UCITS investment, many family offices and other larger investors prefer the UCITS structure over direct holdings for structural reasons and for J. Stern & Co. clients, it also means that they can invest in the World Stars Equity strategy at lower initial amounts.
“For our managed accounts the minimum amount is 5 million, whether it is dollars, pounds or euros,” says Rossbach. We wanted to make our investment strategy more accessible to those who can take a similarly long-term approach to their investments as the Stern family does, but without necessarily having such large sums to invest. Hence it is one of the reasons why we decided to launch the UCITS version.
“Our core conviction is based on the family’s principles: always invest for the long-term, always do your own research and always invest in quality. The Stern family has been following this approach successfully for three generations and now we can also offer it to a wider group of aligned investors,” says Rossbach. The Stern family holds the majority of assets, but the firm’s third-party assets are currently in excess of USD500 million.
The World Stars Equity Strategy as a UCITS fund “is aligned with our investors’ demands, is highly liquid and scalable, and is capable of generating the same types of returns as our managed accounts,” adds Rossbach.
He highlights the fact that despite the concentration of the portfolio – there are around 20-30 stocks – and some companies in the World Stars Equity portfolio having very high growth, the fund is highly conservative in its underlying economic and cyclical risk.
Rossbach believes that investing in companies involved in digital transformation has been of significant benefit to the family and their clients’ portfolios. “For us digital transformation is a key opportunity. We have been investing in leading companies’ digital platforms like Amazon and Alphabet since inception of the World Stars strategy in 2012 and before, but we have also been invested in others like Adobe and American Tower Corporation over the past five years. Companies like these have strong competitive positions and the prospects for significant long-term value creation.”
“If investors look for an asset class that offers scale, return and security and that can achieve sustained positive returns of 9 per cent or more compound as major indices have, then public equities are the only answer, particularly in today’s environment,” says Rossbach.
“Our approach to stewarding wealth over generations is about investing in businesses with global growth and the quality and value to achieve those returns,” adds Rossbach.