Brendan Ahern, CIO of Kraneshares, joins Michael and Ben on this episode. They discuss the creation of Kraneshares Luxury ETF, demographic trends and the wealth effect, challenges in investing internationally, luxury dynamics in a recession, and more!
Investing in luxury stocks can provide exposure to the expanding global luxury market and the continued rise of affluence.
Luxury ETFs offer investors a diversified and differentiated approach to accessing the luxury market, providing ease of access to international luxury companies and professional portfolio management.
Deep dives
The Growth of Global Luxury Market
The global luxury market is projected to double from 2020 to 2030, reaching $570 to $615 billion. This growth is driven by increasing consumer spending and rising wealth, particularly in emerging markets like China and India. The market includes various industries such as leather goods, jewelry, accessories, skincare, cosmetics, and travel. Luxury brands that have been around for centuries, like Hermes, continue to thrive, while newer companies like Montclerc have emerged as popular luxury fashion statements. The market's growth is fueled by a combination of factors, including expanding urban middle-class populations, younger wealthy consumers, and the allure of aspirational luxury goods.
The Investment Potential of Luxury Stocks
Investing in luxury stocks, particularly in the global luxury sector, can be an attractive option for thematic investing. These stocks often exhibit strong growth rates and cater to a unique demographic of affluent consumers. While some luxury brands may have valuation premiums, they have shown resilience even during economic downturns. Companies in the luxury sector benefit from increased disposable income, demographic shifts, and growing demand from emerging markets. Investing in luxury stocks can provide exposure to the expanding global luxury market and the continued rise of affluence.
The Role of Luxury ETFs
Luxury ETFs, like the CraneShares Global Luxury ETF (KXLY), offer investors a diversified and differentiated approach to accessing the luxury market. ETFs provide ease of access to international luxury companies, which may otherwise be challenging for individual investors to invest in directly. KXLY focuses on companies in the luxury sector that are not commonly held by investors, providing exposure to sub-sectors like leather goods, jewelry, cosmetics, and travel. The majority of the ETF's holdings are non-US companies, with a significant emphasis on Asian markets, particularly China. By investing in luxury ETFs, investors can tap into the growth potential of the luxury sector while benefiting from diversification and professional portfolio management.
The Impact of Wealth Inequality on Luxury Consumption
Investing in luxury stocks and the luxury market can be seen as a bet on wealth inequality and the increasing wealth of affluent individuals. Luxury brands tend to target wealthy consumers who have a higher propensity to spend on luxury goods. The growth of aspirational luxury buyers, particularly in emerging markets, has contributed to the expansion of the global luxury market. While the ultra-wealthy are typically consistent luxury consumers, the aspirational wealthy can be more sensitive to economic conditions. However, the overall trend shows that as wealth increases, luxury consumption tends to remain strong, driven by status-consciousness, brand advertising, and the desire to project a certain image. Investing in luxury stocks can be a way to capitalize on the spending patterns of the wealthy and the aspirational affluent.
On today's show, Michael and Ben are joined by Brendan Ahern, CIO of Kraneshares to discuss: the creation of Kraneshares Luxury ETF, demographic trends and utilizing the wealth affect, challenges in investing in international markets, luxury dynamics in a recession, and much more!
Feel free to shoot us an email at animalspirits@thecompoundnews.com with any feedback, questions, recommendations, or ideas for future topics of conversation.
Past performance is not indicative of future results. The material discussed has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.
Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.
Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information.
Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here:
