PHG (Lyxor) replicates the Stoxx Europe 600 consumer goods index (SXQR) which is composed of the major European stocks in this sector.
This index is relatively concentrated, with only 36 values. The index is mainly composed of large caps, ranging from 40 to 100 bn €for the first 10 companies. The consumer goods sectors include companies dedicated to luxury goods (Richemond, LVMH) but also hygiene and beauty products (L'Oreal, Reckitt, Henkel, etc.), the first capitalisation being a cigarette maker (British American Tobacco). The performance of the index has been 17.5% since the beginning of the year, following a long trading range (+ 3% in 2016), which succeeded a 23% rise in 2015. This is the 8th consecutive year of increase since 2009.
The PHG ETF bears costs of 0.3% which are in the market average. Assets Under Management are 117 M€.
The Index is composed of high qualitative companies that have the characteristics of having very strong brands, which allow them to benefit from a steady growth that is often higher than global GDP, with strong associated margins (operating income> 20%). Moreover, these companies are relatively uncyclical, which gives them a defensive aspect during crises. Therefore, the risk/return ratio is very interesting in this sector. Industry players often have relatively large exposure to emerging markets, particularly Asia where growth is on the increase. They are therefore likely to be impacted by fears of a slowdown in the region, or by a fall in major Asian currencies, the Yen and the Renminbi. It is worth noting that more than half of the index is UK stocks, which implies a strong exposure to the sterling. However, this risk is limited because the exposure of these companies is primarily global with a limited % of operations in the UK.
The index rose by nearly 23% in 6 months and is now in the high zone despite the negative impact of the sterling, which lost 4% against the euro over the past two months. This good performance was driven by strong growth in stocks like Unilever (+ 37% in 6 months) or LVMH (+ 75% in 1 year), while the 1st capitalisation, BATS, also performed well (+ 29% in 6 months). These good performances are linked to an Asian recovery, in particular China, the EU's favourable base effect, good US performance and good prospects for global growth.
PHG is part of our Megatrend Euro portfolio since 6/12/16 and has increased by 23% since 6/12/16.
