The demand for luxury goods is still unbroken. Despite the recent economic turmoil and geopolitical issues around the globe, wealthy consumers’ enthusiasm for luxury remains undiminished. That growth in high-end goods spending encompasses luxury items such as high-end accessories (such as jewelry, watches and handbags), luxury brand cars, clothing, leather goods, as well as perfumes and cosmetics. Besides tangible products, there are obviously also luxury services by high-quality service providers. Because luxury good sales keep surging, they present valid and particularly interesting avenues for investors to diversify their portfolios. Investors should keep in mind that the luxury sector is not isolated from the same risks and failures experienced in other sectors.
ETFs with a Clear Exposure to Luxury Goods
The GLUX - Amundi ETF S&P Global Luxury has total assets under management of around 14.07 EUR million (as of the start of March 2016). The goal of this ETF is to track and match the S&P Global Luxury Index’s performance. The ETF’s inception date is December 9, 2008, and the management company is Amundi Investment Solutions/ France. The ETF’s asset class focus is on equities and has an expense ratio of 0.25 - its current primary benchmark is the S&P Global Luxury Net TR. The fund has a geographical focus on the European Region – with a major share of around 67% on Germany, followed by Spain, Belgium, France, and the Netherlands. (Bloomberg databases)
A U.S.-dollar-denominated alternative to the ETF mentioned above is the LUXU - Amundi ETF S&P Global Luxury UCITS ETF - B USD, another ETF that like the GLUX attempts to replicate the S&P Global Luxury Index’s performance results. The ETF has been established very recently by the same management company (Amundi Investment Solutions/ France) – the fund’s inception date is the February 23, 2016.
According to S&P Dow Jones Indices LLC (2016), S&P’s Global Luxury Index tracks 80 of the biggest publicly traded business in the luxury sector that meet their specific requirements for investment.
ETFs with Some Exposure to Luxury Goods
According to S. Smith (2012), the Amundi European MSCI Consumer Discretionary ETF (CD6) has a near 50% exposure to high-end and luxury sector businesses. The fund holds luxury brands such as:
- LVMH Moet Hennessy Louis Vuitton SE (Which includes companies such as Louis Vuitton, Tag Heuer, and Givenchy)
- Compagnie Financiere Richemont (Montblanc, Cartier, Alfred Dunhill)
- PPR SA (Brioni, Gucci, Stella McCartney, Yves Saint Laurent, and Stella McCartney)
- Christian Dior, Burberry, Hugo Boss, BMW, Luxottica, Porsche, and more.
The Amundi European MSCI Consumer Discretionary ETF (CD6) has total assets under management of around 18.40 EUR million (as of the start of March 2016). The ETF attempts to track and match the performance of the MSCI Consumer Discretionary Index in Europe. The ETF’s inception date is the 9th of December 2008, and the management company is again the above-mentioned Amundi Investment Solutions/ France. The ETF’s asset class focus is on equities and has an expense ratio of 0.25. The fund has a clear geographical focus on the European Region.
Besides Amundi’s ETF investment products, as reported by S. Smith (2012) another ETF tracks the above-mentioned MSCI index: SPDR’s MSCI European Consumer Discretionary ETF. The SPDR ETF has total assets under management of around 148.50 EUR million (as of the start of March 2016). The ETF’s inception date is December 5, 2014, and the management company is State Street Global Advisors France SA. The ETF’s asset class focus is on equities and has an expense ratio of 0.30. The fund has a geographical focus on the European Region and is domiciled in Ireland.
The Bottom Line
As wealthy classes continue to trend towards spending in the luxury sector, more and more interesting options to diversify investment portfolios will emerge. With ETFs like those above introduced, intriguing options continue to emerge for investors to capitalize on such spending patterns.
Note: All of the abovementioned data is derived from Bloomberg's database.