Roundhill Investments launched the Roundhill S&P Global Luxury ETF (NYSE Arca: LUXX), which begins trading on the NYSE Arca today. LUXX provides investors with access to the luxury goods sector in a cost-efficient and liquid ETF format.
LUXX tracks the S&P Global Luxury Index, providing access to 80 leading luxury companies across Europe, Asia, and North America. Its exposures span across various industries, including, among others, apparel, accessories & luxury, automobile manufacturers, distillers and vintners, and footwear.
“Luxury goods have shown resilience through challenging economic conditions, and we believe the sector has long-term growth potential,” said Dave Mazza, chief strategy officer at Roundhill Investments. “We are excited to offer investors efficient, low-cost access to gain access to the global luxury sector with the launch of LUXX.”
See more: “Roundhill Launches Generative AI & Technology ETF With CHAT”
Huge Growth Expected
The global luxury market size is expected to grow roughly 50% between 2022 and 2030, according to Bain & Co. This will result in a total market size of more than $600 billion. And Generations Y, Z, and Alpha will be the biggest drivers of this growth. Their spending is set to grow three times faster than other generations.
Companies like LVMH and Hermes have benefited from strong pricing power and high margins driving significant free cash flow generation. Historically, luxury stock fundamentals have translated into long term price performance. The fund’s index has generated an annualized total return of 11.8% since its launch in 2011.
“Overall consumer spending remains resilient, but there are signs that consumers are starting to cut back on discretionary purchases,” said VettaFi’s associate director of research Roxanna Islam. “Luxury goods, however, are less sensitive to economic cycles and tend to hold demand even in times of lower consumer spending.”
Top holdings for LUXX at launch include:
- Hermes International (8.2% weight)
- LVMH Moet Hennessy Louis Vuitton SE (7.9%)
- Cie Financiere Richemont SA (7.6%)
- Mercedes-Benz Group AG (5.4%)
- Kering SA (5.0%)
- Ferrari NV (5.0%)
- Diageo PLC (4.1%)
- NIKE Inc. (4.1%)
- Pernod Ricard SA (4.0%)
- Tesla Inc. (3.8%)
LUXX carries an expense ratio of 0.45%.
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