Last week, another new ETF started trading in New York Stock Exchange. This time it is designed to invest in companies that provide luxury goods and services. The name is Claymore/Robb Report Global Luxury ETF and the ticker symbol is ROB
Claymore Securities Inc., the sponsor of the new fund launched the product by claiming that the fund would provide access to a growing area of the economy that seems to have different characteristics than mass-market. Indeed, such a fund can hopefully remain immune against fluctuating level of consumer sentiment or spending. Those fortunate people who do not always look at price tags probably won't hesitate to purchase a Hammer or BMW or high priced jeweleries or diamond rings, even if the economy weakens.
Even amidst the wide-spread criticism prevalent in Wall street nowadays that the ETF market is growing too quickly, with increasingly narrow offerings, we may give a serious look at this special ETF for the following reasons: In the U.S., there aren't mutual funds or ETFs that focus on luxury. The fund has three-quarters of the portfolio in international companies -- which provides a good diversification and also provides a currency play against weakening dollar.
Most of the stocks in the index are based in leading luxury and wealth markets such as the U.S., France and Switzerland, which recently accounted for nearly 75% of the portfolio's holdings. Companies in Germany, Italy, Japan and Brazil are also represented. Consumer discretionary stocks make up about 66% of the index including names like Christian Dior, Coach Inc., Porsche , Tiffany & Co. and Polo Ralph Lauren Corp. The ETF also has a 22% position in financial-services companies that cater to affluent customers such as UBS, Credit Suisse Group and Goldman Sachs Group Inc. The fund portfolio also has stakes of almost 7% in consumer staples, about 4% in industrials, and less than 1% in materials stocks. Its rules prevent any holding from going over 5% of assets to limit reliance on the performance of a single stock.
Globally, the number of affluent households with at least $1 million in liquid assets has doubled since 1996 to 9.5 million last year. Not all of us can become rich but, we feel, it's a good idea to ROB
some part of the growth of those Riches by investing some of our money in this fund.
Labels: ETF, Sector Investment