The Emles Luxury Goods ETF (LUXE) seeks investment results that correspond, before fees and expenses, to the price and yield performance of the Emles Global Luxury 50 Index, an index comprised of companies that substantially focus on, and significantly benefit from, the sales and consumption of luxury goods globally.
Performance summary of Q3 2021
For the quarter ended September 30, 2021, Fund positions returned -6.98% at NAV versus a benchmark return of -0.15% by the S&P 500 Consumer Discretionary Index over the same period.
- Contributors: Tesla, Lululemon, Hugo Boss, Williams Sonoma
- Detractors: : The RealReal, Peloton
- Outlook: Despite geopolitical headwinds and lackluster consumer data, we remain optimistic that the luxury goods sector will rebound on the back of far-reaching global demand, product diversification, and brand innovation.
Quarter in review
The Fund underperformed its S&P 500 Consumer Discretionary benchmark as China worries and consumer data pullbacks test luxury investors.
Bellwether name LVMH was the first to report 3Q2021 results, belittling weighing concerns around China. Hints of Asia Pacific growth deceleration were triumphed by €44.18 billion YTD revenue across LVMH businesses—boasting 45.6% of YoY revenue growth. With analysts projecting a record year-end revenue €58.48 billion, LVMH underscores consumer loyalty to its brands and the company’s ability to top pre-pandemic growth.
A standout among auto manufacturers, Tesla’s shares soared 14% over 3Q2021 as the manufacturer reported 241,300 vehicle deliveries—up 20% from 2Q2021 and over 73% from 3Q2020. In a world where traditional auto makers continue to slash production forecasts, this record delivery is no shy feat considering that EV’s require far more semiconductors per unit than a traditional IC vehicle.Looking ahead
Allocations to select consumer discretionary (73.6% weight) and consumer staple (23.4% weight) names remain indicators of our conviction in the resilience of global luxury spending.
Widespread COVID vaccine mandates bode well for increased luxury consumption as organized events and storefronts reopen.
The Fund sits at the intersection of two rising trends, discretionary consumer spending and demand for luxury goods—where consumers’ propensity to spend becomes intertwined with social and cultural norms that perpetuate a story of the “Veblen good.”