Despite having over 200 years of history, J Stern & Co is still a relatively new entrant in the investment management space.

Lead by managing partner Jérôme Stern, J Stern & Co transitioned from a family office to an investment partnership in 2012.

In 1805, the Stern family set up a banking business in Germany. This thrived for many years and led to branches being founded in Paris, London and Berlin.

J. Stern & Co. originates from the family office of members of the French branch of the family, who descend from the founders of AJ Stern & Cie, later Banque Stern, and who sold it in 1988 to what is now UBS.

Having been operational in its current form for 10 years now, total assets under management (AUM) stood at $1.2 billion, as at 31/12/21.

Of this, 25 percent is the Stern family wealth, while 75 percent belongs to third party investors.

This means the family is invested directly alongside clients. Mr Stern believes this is a “key differentiating factor” and helps the firm gain clients’ trust.

The assets are split between two strategies: the world stars global equity strategy ($1 billion) and the multi-asset income strategy ($0.2 billion).

Mr Stern’s grandfather – who reignited the firm after World War Two - had three key investing principles. These are still integral to the firm and guide all investment decisions today, Mr Stern stresses.

The principles are:

• Invest for the long-term.
• Always do your own research.
• Only focus on quality.

The final principle is very important. “Quality survives,” Mr Stern explains. “It allows you to sleep at night. The companies are not in any danger of disappearing overnight.”

Quality is a subjective term. For this reason, J Stern & Co has created a definition based around four criteria, which all investment managers and analysts can follow.

To be defined as quality, a firm must: have a strong and sustainable market position; operate in a good and growing industry; be led by a strong management team; and have a very robust balance sheet.

As a result, the firm only holds around 20 to 30 stocks, most of which are recognised brands.

Given the long-term approach to the firm – most clients are investing for the next generations – sustainability plays a key role in the investment process.

“We are lucky enough to be stewards of people’s wealth for the long term. So, we need to invest in companies with similar long-term views.”

Companies that maximise sustainability will be able to maximise returns, Mr Stern explains.

Everything is done in house. The firm now employs around 30 individuals, 10 of whom are research analysts or portfolio managers.

“We need to provide strong conviction in what we do,” Mr Stern says.

Mr Stern’s own background is not in wealth or investment management. Instead, his experience spans corporate finance, M&A and investment banking.

He has previously worked at companies including Nomura, Lehman Brothers and Credit Suisse.

However, the family office baton was passed to him as those that had started it were getting old and wanting to retire.

There was a need for a “complete reset”, so Mr Stern was essentially given a blank piece of paper.

He was not completely alone, co-managing partner and chief investment officer, Christopher Rossbach bought significant investment experience with him, having worked at Lansdowne Partners and Perry Capital, among other firms.

At this point, there were no clear plans to open to third parties.

The first external client approached the firm, which “showed us that what we had built was the right thing,” Mr Stern says.

“It is a full continuation of what was being done before, just more institutionalised,” Mr Stern says, explaining his approach to running the business.

The key is to employ the right staff. To do this, sometimes you have to pass on “stars”, he explained.

This can be a difficult decision, but is ultimately the right thing to do. The importance of maintaining the right culture cannot be overstated.

Mr Stern emphasises the value in building a cohesive team.

“It is only through teamwork we can make sure the wheel spins in the right way.”

As the firm continues to grow and evolve over the years, Mr Stern will “ensure there is no strategy drift”. It has served the company well for a long time and he believes it will continue to for many years ahead.