Chinese Lunar New Year is just around the corner, and with expectations that more Chinese citizens will be traveling this year, investors may want to take a closer look at an ETF like the KraneShares Global Luxury Index ETF (KLXY). It offers exposure to global luxury goods and travel firms that may benefit from a potential rebound in global vacations.
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Recent projections of the Lunar New Year travel season in China suggest some improvement. Some 189 million passengers made trips on the first day of the travel season in late January, boosting both domestic and international travel. International travel could also be seeing a boost from visa-free travel deals with Thailand, Malaysia, and Singapore.
Travel growth among Chinese consumers could offer one route to unlock spending again as many citizens are still sitting on a savings glut left over from the “Zero COVID” lockdowns. KLXY’s focus on both luxury goods and travel-related companies, then, could benefit not only from travel but from gift giving related to holiday celebrations.
Travel ETF KLXY’s Approach
The travel ETF tracks the Solstice Global Luxury Index for a 69 basis point fee. In doing so, it looks for firms that not only operate in travel and leisure, but in premium and luxury goods. The strategy’s index screens securities for size, trading volume, and county of origin, while also weighting for market capitalization. It weights the top five securities higher, while capping those outside the top five at 4.5%.
That investment strategy has helped KLXY outperform both its ETF Database Category and FactSet Segment averages over the last three months. The strategy has returned 8.1% in that time compared to 7.2% and 6.7%, respectively. KLXY could be one strategy to watch for China exposure via multinational firms as investors look for other routes into emerging markets.
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