With the holiday season begun in the western world, and travel for the Chinese New Year just a few weeks past that, it may be time to look at investing in global travel. While, yes, tariffs and other trade rules loom for some investment areas, global travel, especially in the luxury category, remains strong. As luxury travel looks set to grow, then, now could be the time for a global luxury ETF. The KraneShares Global Luxury Index ETF (KLXY) could provide a helpful tool therein.
See more: Get Ex-China Emerging Markets Exposure in KEMX
KLXY charges a 69 basis point fee for its approach. The global luxury ETF tracks the Solactive Global Luxury Index, which includes developed markets firms offering luxury goods and services. Specifically, the index selects companies involved in travel and leisure, premium apparel, and other luxury goods. The ETF’s index weights its top five securities higher than the rest of its holdings, capped at 4.5% each. While it does have a notable U.S. tilt, it also invests significant assets in global firms from other developed markets.
A Global Luxury ETF Approach
While the fund has wavered in recent months, its performance has rebounded as markets entered the holiday season. Many U.S. investors may understand the scope of holiday travel in western markets, but China’s New Year travel annually sees almost a quarter billion travelers. Those numbers speak to the case for a fund like KLXY, with travelers buying gifts or purchasing goods and services for themselves.
In terms of portfolio construction, the strategy could also help add diversification to a portfolio. A plain, global equities fund may offer diversification too, but a targeted approach via KLXY could intrigue more. Taken together, the fund may be worth an add as a thematic satellite on top of a core set of holdings.
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