Trustnet Magazine 60 March 2020 | Page 48

In focus [ SECTOR PROFILE ] 48 / 49 “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