Seeking Out the Big Winners in the Luxury Universe
The Luxury Consumer Fund launched in 2007 at the height of the Great Financial Crisis. This June marks its 13th anniversary, and we are once again in a global crisis – this time the COVID-19 pandemic. We have successfully managed the Luxury Consumer Fund through global crises in the past and delivered strong performance, and we are doing the same now through the COVID-19 crisis: the Fund has delivered +49% performance since launching, and we believe it will continue to deliver strong performance in the future.
The Fund is much more concentrated today. Big companies have gotten much bigger over the past decade. In Technology we now see the entire sector dominated by 5 companies. A similar thing has happened in the Luxury Consumer industry, where the big guys have thrived and smaller companies have struggled.
We have, over the past decade, looked for major shifts in spending globally. One of the major changes in spending which is reflected in the Fund has been spending on improving life quality and wellbeing. Private nurseries, private tuition and other similar areas have been where pricing power has increased and we are seeing very strong growth. This is now our second largest exposure in the Fund and could be the largest exposure in the Fund in the future, a big source of upside for investors.
The Fund’s ability to change is critical. As the world changes, so too can the Fund’s exposure. This is driving strong performance in the Fund as we continue to be exposed to the highest growth trends in consumer spending. But we have also stayed invested in stocks over the long-term which have been the big category winners in their sectors. Currently half of the names in the Fund are stocks we owned on launch in 2007. With respect to industry winners, we are here for the long-term, and we stick to our strategy.
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