Compounding is the most powerful force in investing. Patient investors who resist the temptation to trade frequently are rewarded with superior long-term outcomes.
The Compounding Advantage
Companies that compound earnings at 15-20% annually double in size every 4-5 years. Holding a great business for 20 years can create returns that no amount of trading can replicate.
Tax Efficiency
Long-term holding also produces significant tax efficiency. Capital gains from assets held more than one year are taxed at lower rates, and unrealized gains can compound indefinitely without triggering tax events.
Permanent Capital Structure
IKON Group’s permanent capital structure — not constrained by fund lifecycles — allows us to hold the best businesses for as long as they continue creating value, compounding returns year after year.
When to Sell
We sell portfolio companies when the strategic rationale for our ownership has been fully realized, when a better-positioned buyer emerges, or when capital recycled into new investments can generate superior returns.
Explore more insights from IKON Group Investments on global investment trends and portfolio strategy.