In focus
[ SECTOR PROFILE ]
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“I used to have brilliant
conversations with one
client because he collected
Picassos. It sounds like
he was incredibly rich, but
he wasn’t”
PERFORMANCE OF FUNDS VS INDEX
Name 1yr (%)
3yr (%)
5yr (%)
10yr (%)
Morgan Stanley Global Brands 13.86 34.21 92.02 251.26
Fidelity European Values 11.64 38.35 55.66 186.77
Amundi S&P Global Luxury UCITS ETF 4.14 28.07 49.17 164.26
MSCI World 8.96 20.15 61.03 175.67
Source: FE Analytics
crisis and pay double-digit dividends.
“Hermès trades on high multiples,
but this reflects the exceptional
historical performance since its
IPO in 1993 and the visible growth
outlook from here,” adds Morse.
Despite the setback from
coronavirus, the growth of
middle classes in Asia is likely
to maintain demand for luxury
brands.
Morgan Stanley
Global Brands
The theory behind Morgan
Stanley Global Brands is
that high-quality companies
capable of generating
superior returns over the
long term are typically
built on dominant market
positions, underpinned by
powerful, hard-to-replicate
intangible assets. FE
Investments says the fund’s
TRUSTNET
managers have a proven
track record of picking
long-term industry leaders
that can defend themselves
from disruptors. However,
it warns that the fund is
concentrated and spread
across just four sectors,
meaning it should be used
as a satellite investment
among a diversified portfolio
of funds rather than a core
strategy.
Amundi S&P Global
Luxury UCITS ETF
Amundi S&P Global Luxury
UCITS ETF seeks to replicate
the performance of the S&P
Global Luxury index, which
comprises 80 of the largest
publicly traded companies
that produce or distribute
luxury goods or services.
These companies must
meet specific investability
requirements. Companies
Whether you own them directly,
or via a fund, making it a success
all comes down to making the right
decision and not getting emotionally
involved in the assets you buy. As a
result, Lowcock says it is a good idea
to keep hobby investments separate
from your core portfolio.
“I used to have brilliant
conversations with one client because
he collected Picassos,” he adds. “It
sounds like he was incredibly rich, but
he wasn’t: he just bought some of the
in the investable universe
are ranked first by luxury
exposure, through one of
four scores from 0.25 to 1,
then by market cap. The ETF’s
top-three holdings are Tesla,
LVMH and Kering. It has
made 164.26 per cent over
the past decade, compared
with gains of 175.67 per cent
from the MSCI World index.
The ETF has ongoing charges
of 0.25 per cent.
drawings and unfinished works for
about £5,000 a pop.
“He always said to me, ‘it may be
worth something, but the fact is I
hang it up on the wall and I enjoy it’.
“That’s the way to combine a
hobby with an investment – you get
satisfaction from something and any
added value is just a bonus.
“This is important when it comes to
hobbies. Although wine is a difficult
one, because you can’t enjoy it if you
want to make any money out of it.”
Fidelity European
Values
Investors who want to tap
into the growth available
from brands and luxury
products and services but
who don’t want to put all
their eggs in one basket
may wish to invest in a
more general fund or trust
with some exposure to this
theme. Fidelity European
Values fits this bill. The
trust has a bias towards
quality and growth, with
the manager seeking
out attractively valued
companies that are able
to consistently increase
their dividends. It has made
186.77 per cent over the
past decade, compared
with gains of 162.18 per cent
from its IT Europe sector.
Winterflood named the trust
as one of its picks for 2020.
trustnet.com