Guide to investing the richest family on the planet

Sam Walton would probably be baffled by the businesses his grandchildren have chosen, although it is likely that the late founder of the world's greatest family fortune had applauded his initiative.

His grandson Ben Walton, 44, owns Zoma Capital, which makes investments in areas such as energy and water. His cousins ​​Steuart and Tom bought Rapha, a British cycling brand, for a total of US $ 225 million in 2017. Ropeswing Group, owned by Tom, operates a variety of restaurants in Bentonville, Arkansas, which focus on millennials.

Its high profile investments mark a change with respect to the previous generation, which are now in the 60-70 years. Despite her enormous wealth, Alice, Jim, Rob and the late John Walton kept their investments and ventures mostly secret. But that is changing as younger Waltons exert more influence.

The most visible signs can be observed in the family's hometown. Bentonville has a handful of trendy bars and restaurants, including the Holler, a warehouse-sized establishment with shuffleboard rails and plant-based hamburgers, and Undercroft, a clandestine bar located beneath a historic church that is now a restaurant deluxe.

All are part of Ropeswing, whose goal is to make Bentonville a destination for young workers and their families. Bicycle trails that cross the outskirts of the city are the first step in the plans of Tom and his brother Steuart, both in their third decade of life, to turn Bentonville into a cycling mecca, while Steuart co-founded a company that manufactures aerobatic and touring aircraft. An undisclosed Walton family member is now part of the board of FoodMaven, a startup that sells surplus food at a discount, in which the family has an investment.

There are other signs of the growing influence of the younger generation. Three of the five members of the board of directors of the family foundation now come from that entourage. There are Lukas Walton, 32, who has the right to vote the general and limited units at Walton Enterprises of his father's assets, according to court documents. Steuart replaced his father Jim, 71, in the Walmart board in 2016.

Kiki McLean, spokeswoman for the family, declined to comment.

Managing such generational transitions is one of the top priorities for the richest families in the world. About US $ 3.4 billion in multi-million dollar wealth is expected to be transferred over the next two decades, PwC said in a 2018 report, and planning the succession is a major concern.

There is no common guide or format. While other rich dynasties such as the Koch have tried to keep family members at the top of the business, the Waltons have outsourced Walmart to professional managers. Steuart and his uncle Rob, 74, are on the board of directors of the retail chain, but most of the extended family focuses their energies outside the company.

For now, family holdings outside of Walmart are a fraction of their total wealth, still anchored by the retailer that Sam Walton founded in 1950. The Walton Enterprises vehicle owns a 50% stake in Walmart, valued at around US. $ 160,000 million.

That is changing. The family's participation in Walmart paid about $ 3 billion in dividends over the past year, while the Walton Family Holdings Trust has sold $ 10 billion in Walmart shares over the past three years. Currently, about US $ 40,000 million of the family's wealth is kept out of Walmart shares, according to Bloomberg calculations.

Archives of the US Internal Revenue Service show how $ 9 billion of Walton's fortune was dispersed at the end of 2016. They detail the investments of 21 trusts created by the widow's estates of Sam, Helen, and their son John.

Somehow, your investments are a microcosm of trends that cover the entire market. Passive funds predominate, with about US $ 4,000 million allocated to vehicles such as Vanguard Emerging Markets ETF or Northern Trust Russell Index. Another US $ 2 billion is in active funds.

Around US $ 2 billion correspond to private equity, risk and hedge funds. The money is distributed in a series of stellar names, including US $ 81 million in AQR Capital Management by Cliff Asness, US $ 190 million in Tiger Global Management by Chase Coleman and US $ 71 million in Viking Global Investors by Ole Andreas Halvorsen.

The younger generation is investing some of those profits in their own and diverse companies. It's all part of an approach that allows the family to reposition themselves for the future, according to Byron Trott, founder of BDT Capital Partners, who advises some of the wealthiest families in the world.

"There is family leadership at the board of directors level, a non-family management that leads the operating company and other family members who work as investors and innovative entrepreneurs," he explained.