| | | Swedish investment companies ("Investmentbolag"), part 1
I mentioned Investor in the Value Investing thread.
It has returned approximately 16 % a year since 1987. The Swedish stock market index has returned around 12 %.
I forgot to mention some of the key attributes to its success.
Investor was founded in 1916. The reason was a law change, which made it difficult for the Wallenberg family bank (today a part of major Swedish bank SEB) to own stocks.
It became a sort of holding company – a closed-end mutual fund. The closed-end mutual fund has since become a Swedish specialty of sorts. We have many 'investmentbolag' (investment companies), and they have performed quite well as a group. The reason? A key part is an alignment of incentives. Since the capital is permanent, they don't have to deal with outflows, which usually come at the worst possible time. They can also keep overhead low.
After Ivar Kreuger's business empire collapsed in the 1930's, Investor bought substantial parts of it at bargain prices.
It then slowly added important pieces to its portfolio of companies. Several of Investor's key holdings have been part of the portfolio since inception. They have owned most of them for decades. They are the (economic) rulers of Sweden in everything but name (and we all know that they who control the money, control the country...), controlling > 50 % of the stock market as measured by market cap. This has been a key part of both Investor's success, and Sweden's success as a country; they go hand in hand; indeed, Wallenberg patriarch's have long seen themselves as a sort of "keepers of the country". They spend huge amounts on R&D, funding important parts of Swedish science. |
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