The challenge of keeping pace with the changing economic landscape is among the most pivotal not just for luxury goods brands but for all businesses with a global customer base. So it's fitting that Dominion has created a new fund, at the crux of which lies finding investment opportunity in change.
Fund managers at the Dominion Global Trends Strategic fund research and buy companies best placed to make the most of changes associated with growth opportunities. They call it 'global trends investing.' It looks at where economic growth is coming from, both currently and in the future, and determines the best ways to make money off the back of it.
In addition to luxury brands it also takes into account other forms of discretionary spending such as technology, education for their children and healthcare - providing a well diversified portfolio. And 'consumer discretionary' is the heaviest weighted sector, carrying more than 14 per cent of the portfolio. One of the largest holdings in the consumer discretionary sector is LVMH, a company that appears to have adapted well to developing global sales flows as a significant percentage of its sales now come from retail tourism.
Among its other most prominent (non-luxury) holdings are Unilever, Ebay, ASML Holdings and Caterpillar.
If it spots a turbulent market it will put its active risk management system to use. This system is designed to control downside volatility, aiming to generate better than benchmark returns, with less than benchmark risk.
This is a fund with a top-down global portfolio with an emphasis on low volatility. It's not the fund with the most exposure to luxury goods by a long shot, but its investment strategy moulds well with the way the world is evolving. It's definitely a fund to keep a close eye on.
Holdings in the Dominion Global Trends Strategic fund
| Sector | Weight | Example stock |
| Agriculture | 12.29% | Syngenta |
| Consumer Discretionery | 14.45% | LVMH |
| Consumer Staples | 6.36% | Unilever |
| Energy | 11.59% | Schlumberger |
| Finance and Commerce | 11.37% | Ebay |
| Health | 9.18% | Polar Capital Healthcare Opportunities Fund |
| Infrastructure | 6.46% | Caterpillar |
| technology | 9.63% | ASML Holdings |
| Metals and Mining | 5.93% | Antofagasta |
| Water | 10.20% | Pentair |
Source: Dominion
Top 20 funds with the most exposure to luxury goods
| Group/Investment | Equity Industry Luxury Goods % (Net) | Return (Cumulative) - 18/09/2007 to 17/09/2012 | Peer group rank -18/09/2007 to 17/09/2012 |
|---|---|---|---|
| Baillie Gifford Long Term Glbl Gr B | 7.30 | 29.47 | 216 |
| MFS Meridian Global Concentrated A1 USD | 6.99 | 31.35 | 196 |
| Fidelity European Opportunities | 6.23 | -1.39 | 912 |
| Allianz Continental European A | 5.67 | 16.37 | 458 |
| FF&P European Equity B Inc | 5.63 | -25.40 | 1,132 |
| CF Odey Continental European R Acc | 5.60 | 12.49 | 569 |
| Skandia UK Select Acc | 5.45 | 11.13 | 621 |
| Melchior Asian Opportunities A GBP | 5.22 | -18.18 | 1,105 |
| Schroder European I Inc | 5.13 | 15.67 | 475 |
| JPM Europe Strategic Growth A (dist)-EUR | 4.97 | -2.71 | 936 |
| MFS Meridian Europ Core Equity Gr A1 EUR | 4.72 | 29.05 | 226 |
| Artemis Global Select I Acc | 4.55 | . | . |
| Santander MM European Equity A | 4.54 | -8.93 | 1,034 |
| BlackRock European Dynamic A Acc | 4.26 | 47.31 | 67 |
| Santander PF Europe Ex UK Eq A | 4.24 | -5.19 | 981 |
| MFS Meridian Continental Europ Eq A1 EUR | 4.06 | 24.14 | 306 |
| JOHCM All Europe Dynmc Gr EUR Instl Inc | 4.05 | . | . |
| Marlborough European Trust | 3.82 | -7.71 | 1,019 |
| GAM Star Cont European Equity GBP Acc | 3.81 | . | . |
| Janus US Venture A EUR | 3.71 | 23.11 | 326 |
| . | . | . | . |
| Number of investments ranked | . | . | 1,151 |
| Peer Group Average | 0.23 | 13.89 | . |
| Source: Morningstar | |||
There are several ways you can invest in luxury goods, but if you're looking for some extra security for your long-term returns, your options become a bit narrower. We recommend J.P.Morgan's Global Consumer Trends fund which will give you a broad investment in the sector, or Morgan Stanley's UK Global Brands fund if you're looking for something more specific. Both have TERs of less than 2 per cent and have a solid track record over the long term, having consistantly thumped the IMA Global over a five year period.
Our favourite funds for luxury goods investment
| Group/Investment | Portfolio Date | (Cumulative) | Peer group rank | (Cumulative) | Peer group rank | (Cumulative) | Peer group rank |
|---|---|---|---|---|---|---|---|
| Europe OE Sector Equity Consumer Goods & Services | . | . | . | . | . | . | . |
| Dominion Global Trends - Consumer EUR DC | 31/03/2011 | -1.46 | 70 | 42.72 | 41 | 24.39 | 46 |
| JB EF Luxury Brands-CHF A | 31/07/2012 | 2.61 | 60 | 62.05 | 11 | . | . |
| JPM Global Consumer Trends A Acc | 31/05/2012 | 6.22 | 46 | 20.60 | 55 | . | . |
| Morgan Stanley UK Global Brands A GBP | 31/07/2012 | 13.32 | 26 | 49.54 | 26 | 61.22 | 16 |
| Number of investments ranked | . | . | 77 | . | 63 | . | 55 |
| Peer Group Average | . | 8.23 | . | 45.74 | . | 52.59 | . |
| Source: Morningstar | |||||||
Also see: Luxury is a long-term investment
