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Luxury brand ETFs give investors diverse exposure amid inflation

Yahoo Finance's Pras Subramanian outlines the various luxury brand ETFs currently being offered to allow investors' exposure to high-end car and fashion labels.

Video Transcript


DAVE BRIGGS: Rising inflation increasing odds of a recession and a significant pullback in equities are not dashing spending in the luxury category. High-end consumers continue to splurge. How can the rest of us profit from that spending? Pras Subramanian here with that side of the story. Hello, sir.

PRAS SUBRAMANIAN: Hello. So you know, and across my neck of the woods, you know, I'm talking about people like the Rolls-Royce CEO, and Lamborghini CEO, and even Audi, they're talking about how consumers at the highest end are really sort of-- they have insatiable demand for goods, right?

I'm talking about not just the cars in the middle, the highest end. So what's going on here? I spoke to Brian Sozzi about this, too. And the Canada Goose CEO told him, the Neiman Marcus CEO told him, that there actually just cannot have enough goods for these high-end consumers, actually.

So the question is, how do you then invest or actually try to benefit or capitalize on these trends, you know? And so I was talking to some people in the ETF world. And one ETF that we were talking about is the Amundi Global Luxury, ticker GU-- LUX, down about 15% this year. So it's kind of trending with kind of the broader market.


PRAS SUBRAMANIAN: But it is a way to bet on brands, like you see here, LVMH, Tesla, Hermes, Estée Lauder, types of brands like that, or Richemont, which owns things like IWC watches and other types of luxury brands, too. So that's one way to get into this sort area where you can actually sort of pure-play bet on high-end luxury, on those consumers that really cannot buy enough of these goods. I also want to note that the strong dollar makes overseas goods cheaper, too.

RACHELLE AKUFFO: So then, Pras, what are some other options for investors who are looking for some of this luxury exposure as well?

PRAS SUBRAMANIAN: You know, I spoke to the guys at Global X, they manage another family of ETFs. And one of their experts told me about how maybe you can get into this trend earlier as opposed to later. And one of the things that we talked about was millennials.

So basically, you know, in the next five years, 70% of luxury buyers will be millennials and Gen Z. So one way to do that is with the-- with their millennial fund that they mentioned to me. Now, you know, most of these brands in this millennial ETF are a lot of smaller things like Starbucks, and Nike, and things. That's more like, you know, more mainstream brands. But also their stuff like Apple, Lululemon, Peloton, and you just guys had SoulCycle and recently, VF Corp, and other companies like that. So that's a way to get into that.

And then in my neck of the woods, again, like luxury autos, autonomous EVs. So Global X has a drive ETF that has companies like Mercedes, and Ford, Tesla, Apple, Microsoft, companies involved in the autonomy and the EV game. And that's a way to capitalize on this in a world where there's so many expensive goods and buyers wanting high-end goods in that world, too.

RACHELLE AKUFFO: A very cool way to get a less expensive piece of that luxury action. Great stuff. Pras Subramanian, thank you for that.