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.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.