The GLUX (Amundi) tracker replicates the S & P Global Luxury Index, which is made up of the 79 largest international luxury goods and services companies. Note that the GLUX benchmark is quoted in USD. The ETF is quoted in Euro, but bears multiple currency effects given its geographical distribution. Despite its seniority (2008), the actual history of GLUX is brief because until February 2014 this ETF replicated the MSCI Insurance index.
The costs of this ETF are low (0.25%), in particular for a thematic tracker and the AUM are approximately €50m. Replication is indirect (via a swap) and the dividend method is capitalized. 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% that weigh the top 10 capitalizations, the luxury automobile (Daimler, BMW, Tesla) represents c.14%, spirits (Diageo, Pernod Ricard) c.7% and luxury (LVMH, Richemont) c.14%. But GLUX also gives investors access to sectors such as luxury cruises (Carnival), clothing (Nike) and even casinos and luxury hotels (Las Vegas Sands). All these companies share the common trait of being world leaders, with strong brands, generating high margins and regularly delivering growth levels well above the global GDP. They are more or less cyclical depending on the compartments - very cyclical for the auto part and hotels, not very cyclical for spirits - but have one thing in common, which is an important exposure to Asia and first of all China, while emerging countries become the main outlet, so India Brazil and Russia are gradually gaining importance.
The geographic distribution of GLUX makes it a good diversification tool on the theme of luxury. Europe accounts for almost 50% of the capitalization of the index, followed by the United States (38%). But Asia is also represented: Hong Kong, Japan and Korea together account for nearly 10%, Australia closes the ban with 2%. GLUX has delivered a regular positive performance o 8.5% in 2014, 4.7% in 2015,1.7% in 2016 and 22,1% in 2017 but decline by -9% in 2018.
This index can be volatile, as evidenced by the sharp correction between April 2015 and February 2016 (-28%) slightly higher than that of the index stoxx600 (-26%), but it is above all a growth theme related to the development of emerging economies, primarily Asian ones.
Latest developments
GLUX grew by 22.1% in 2017, more than double the performance of the Stoxx600NR (10.6%) mainly driven by the luxury engine, but dropped by 9% in 2018, which is, however, a better performance than the Stoxx600 (-10.7%). Luxury finally fell in the second half of 2018 with the darkening of the global outlook and especially fears about the Chinese economy.
China has become the main outlet for luxury companies, especially for high-end automobiles, drinks and ready-to-wear.
However, the Q418 corporate results are reassuring, like LVMH which has just published results in line with expectations and solid prospects. For now, market concerns have not been met, and the Chinese slowdown was smaller than feared. However, the expectations for 2019 are lowered which could in a second time limit the rise of the market after a return to the mean.
