Will the Luxury ETF Feel the Effects of the Falling Dollar?

The high-end Claymore/Robb Report Global Luxury (ROB) exchange traded fund (ETF) has been a strong performer lately and one of the factors behind its success could be Coach’s (COH) popularity. Coach, which is a top holding in ROB at 3.6%, has been on a real winning streak. For the past five years, earnings have grown at an average annual clip of 46% and sales by 29%, reports Marilyn Much for Investor’s Business Daily. Currently, ROB is up 10.5% for the month, having launched in July.

Many of the elaborate holdings in ROB, such as Diamlerchrysler (DAI), Hermes and Porsche (PSEPF.PK), are based in Europe, which is struggling with the fact that the euro has hit new highs against the dollar. When the dollar is weak and the euro is strong, European products are more expensive for U.S. consumers, thus European companies could take a hit, explains Kyle James for the Marketplace segment on American Public Media. Perhaps middle-class buyers who splurge on luxury items included in ROB are watching their wallets a little more closely in the recent credit crunch. We’ll have to wait and see if these negative effects from the low dollar and high euro spill over, staining ROB’s performance.