GLUX (Amundi) replicates the S&P Global Luxury Index, which is composed of the 76 largest international luxury goods and services companies.
Note that the GLUX benchmark is quoted in USD. The ETF is quoted in Euro, but supports multiple currency effects given its geographical distribution. Despite its long track record (2008), GLUX's actual history is brief because until February 2014 this ETF replicated the MSCI Insurance Index.
The costs of this ETF are low (0.25%), especially for a thematic tracker and the AUM are around € 23M. Replication is indirect (via a swap) and the method of capitalization is used. The tracking error of this ETF is very low (0.09% in 3 years).
Alternative ETFs: VCR ( vanguard USD), DC6 ( Amundi)
Index & components
This index is rather broad, which is reinforced by the diversity of its sub-sectors.
Of the c.53% of the top 10 companies, luxury cars (Daimler, BMW, Tesla) represented c.15%, spirits (Diageo, Pernod Ricard) c.12% and Luxury (LVMH, Richemont ) c.12%. But GLUX also gives investors access to areas such as luxury cruises (Carnival), clothing (Nike) and even casinos and luxury hotels (Las Vegas Sands).
All of these companies are global leaders, with very strong brands, generating high margins and regularly delivering higher growth levels than global GDP. They are more or less cyclical according to the compartments - very cyclical for the car and hotels, not cyclical for the spirits - but have a common point, which is an important exposure to Asia and first of all to China, while emerging countries are becoming the main outlet, so India, Brazil and Russia are gradually gaining importance.
The geographical distribution of GLUX makes it a good tool for diversification on the theme of luxury. Europe accounts for nearly 50% of the index's capitalization, followed by the United States (40%). But Asia is also represented: Hong Kong, Japan and Korea weigh together 8%. Australia closes the march with 2%. GLUX has recently delivered a positive yearly performance (8.5% in 2014, 4.7% in 2015 and 1.7% in 2016).
This index can be volatile, as evidenced by the sharp correction between April 2015 and February 2016 (-28%) slightly higher than that of the stoxx600 index (-26%), but it is above all a growth theme linked to the development of emerging economies, primarily in Asia.
Latest developments
GLUX has increased by 12.8% since the beginning of the year, 4.6 pts better than the Stoxx600NR mainly driven by the luxury engine while the automobile which was penalized in the first part of the year due to a weaker US market and diesel scandals, has been steadily rebounding since the beginning of September as a result of a very dynamic European market.
From a macroeconomic point of view, the sustained growth of Chinese consumption and the strength of the Yuan vs the Euro and the Dollar is an important support factor for the luxury sector, whatever the sub-segments, with retail sales which grew by more than 10% over the last 3 months (including 11% in June).
Another support factor is the rebound of the pound after the last words of the BOE whereas the weighting in UK stocks represents nearly 11%.
