Luxury Goods ETF Bets on Bagging Hermes, LVMH Returns

Roundhill Investments, the thematic ETF issuer, is going all in on jewels, shoes and sports cars as it plans to launch an exchange-traded fund that aims to capitalize on the growth in global luxury goods sales. 

The Roundhill S&P Global Luxury ETF (LUXX) is expected to begin trading Aug. 23 and track the S&P Global Luxury Index, which is composed of 80 of the world’s largest public luxury goods companies. The fund adds to the issuer’s stable of 10 other ETFs—which cover areas from video games to generative AI—with $697 million in assets among them.  

The fund aims to provide exposure to the worldwide luxury goods industry. Roundhill hopes to ride growth propelled by the increasing number of affluent consumers, company officials said. 

“Across the globe, there’s been a ‘have and have-nots economy,’ and luxury brands have benefited from that,” said David Mazza, chief strategy officer at Roundhill. “Also, luxury means different things in different countries; Nike shoes, for example, may be a luxury purchase for many people in emerging markets.” 

A January report from Bain & Company forecasts the consumer base for luxury products will expand from 400 million people in 2022 to 500 million in 2030—a 25% jump. The report also predicts that the value of the luxury market globally will rise from €353 billion (about $383 billion) to between €540 and €580 billion in 2030.  

Luxury Goods ETFs 

While the fund has a major allocation to Europe, whose stock market has lagged the S&P 500, the luxury goods index has consistently outperformed the rest of the European market. LUXX’s underlying index has a 10-year annualized total return of more than 10% as of July 31, compared to 5.2% for the iShares Europe ETF (IEV). The U.S. market, as measured by SPDR S&P 500 ETF Trust (SPY), still outperformed both, returning 13% annually over the same period. 

LUXX isn’t the only ETF aimed at this market. Fellow thematic ETF purveyor Tema Global launched the Tema Luxury ETF (LUX), an actively managed luxury stock ETF with an expense ratio of 0.75%, earlier this year. LUXX will have a 0.45% expense ratio. 

Contact Gabe Alpert at [email protected]