david.fm

Are luxury goods out of fashion ? the short answer is no. Luxury house Hermes (famous for its Kelly bags and ties) reported a +11% overall in second quarter sales and over 44% on kelly bags mostly fueled by its growth in Asia.
Similarly, Swatch (that doesn't only produce the famous swatch watches but also owns luxury brands like Omega, Breguet and Blancpain) is reporting that the worst is over.

In luxury brands competition is limited to well established brand names. To create a well established luxury brands your timeframe has to be of a century - or in some cases more. Basically the barrier of entry in this market is very high.

As the sector has been largely penalized in the "post-Lehman epoque" (September 08 to March 09) now it might be a good time to invest.

According to a recent survey Chinese prefer European luxury brands like Louis Vuitton and Cartier.
This is certainly not a trading idea but an investment one. In the next years we will certainly see a rebound in luxury sales (it started already) especially in emerging asia. Year to date returns are over 25% (Pictet and Julius Baer funds) and there is still some upside potential.

As I said in my CNBC appearance nothing goes up on a straight line hence, given that the selection of the best luxury companies might be tricky, I recommend to entry through an actively managed mutual fund like the following:

• Pictet Premium Brands Note: this fund is widely available with a 0% entry fee via the online brokerInternaxx where basically expatriates from all around the world can have an account. Particularly nice on Pictet funds is the level of details available on the fund website including a monthly fund manager update and the bio of each fund manager
• Julius Baer Luxury Brands Fund available also in Swiss Francs.
• Clariden Leu Luxury Goods Equity fund available in Euro

With hefty bonuses back in town and the sense of guilt for luxury expenses fading this sector is certainly an interesting one. After all to have luxury margin, you need luxury products.