We talk to an investment firm set up to manage the wealth of a 200-year-old European family, and which has recently gone over the $1.0 billion AuM mark.
A family-owned wealth management house with a big value investing focus predicts that inflation pressures will subside, but it is staying fully invested and minimising cash exposures.
J Stern & Co, the investment firm which oversees assets for the 200-year-old Stern dynasty, in May 2021 went above the $1.0 billion mark for assets under management. And as wealth managers look forward beyond the pandemic, the drumbeat of concern about inflation gets louder. But J Stern & Co does not appear overly concerned.
“As the global economy opens up again, it is normal that there are bottlenecks and shortages. Inflation is now spiking up, albeit from a very low base. Are we entering a phase of hyper-inflation? We believe that the short-term issues will subside as people go back to work and global supply chains get back to normal and that there are few indicators of sustained pricing pressure,” the group’s founder, Jérôme Stern, told this publication.
“Furthermore, given the massive amount of debt which the global economy and the global financial system has had to shoulder, a bit of inflation may not be necessarily a bad thing. As multi-generational families such as the Stern family have painfully learnt over centuries, the best way to protect wealth against inflation is to remain invested and to minimise unproductive cash holdings, which devalue in real terms,” he said.
As reported a few days ago, a survey by UBS of high net worth families and business owners finds inflation is a growing concern. Governments have amassed heavy debts amid the pandemic, and central bank bond buying/money printing, along with forces such as supply disruptions, is driving up consumer prices.
The J Stern & Co organisation comes to the inflation debate with a long perspective. The Stern family accounts for around 25 per cent of assets under management. The Stern banking dynasty traces its origins to a wine merchant family which transformed its business into a bank in 1805 on the counsel of their neighbours, the Rothschild family, who had gone through that transition a few years earlier (coincidentally, the same year that Swiss private bank Pictet was founded). The family flourished, operating across Europe. During the Second World War, the French branch of the family represented by J Stern & Co fled to New York in 1940.
Whilst in New York, Maurice Stern created an investment strategy
of long-term value stock-picking. In 1946, he returned to Paris
to rebuild the banking business in Europe, including an asset
management business. After being run by two generations, the
business, called Banque Stern, was sold in 1988 to Swiss Bank
Corp (later known as UBS). The family created a family office in
Geneva for the Stern family. J Stern & C is the
continuation of that family office, having been brought to London
after the global financial crisis. J. Stern & Co became
a regulated entity in 2012 when it took on third-party clients.
Today, it has offices in London, Zurich and Malta. (One of the
benefits of its Malta presence is that it gives the group a
foothold in the European Union after the UK left it.)