Often found at theaters and museums, Kwon Mee-yoo has covered a wide range of cultural fields from K-pop and dramas to theater and fine art for over a decade. Now as K-Culture Desk editor, she tries to connect Korean culture with global readers through fresh perspectives.
’Luxury funds’ ahead in earning rates
By Kwon Mee-yoo
Despite the global economic slump, the luxury industry remained undiminished. In fact, the lucrative sector saw growth as did its stock prices and investment from funds.
Although the sluggish economic conditions across the globe have caused a sharp drop in fund returns, “luxury funds,” which mainly invest in luxury brands, have kept on rolling in an impressive manner.
FnGuide, a domestic securities information service provider, said Wednesday that mutual funds investing in top luxury brands marked the highest earnings rate among 33 types.
According to FnGuide, funds investing in high-end outfits chalked up a 13.1 percent return last year. The profit rate is even higher for long-term investments ― 48.5 percent for two years and 136.4 percent for three years.
Their portfolios include the LVMH group, the world's largest luxury goods company that manages Louis Vuitton, Fendi, Bulgari and some 60 other brands, and Richemont, which owns Cartier and Montblanc. Other notable high-end entities in the portfolios are Christian Dior, Tiffany, Swatch and Coach.
The luxury funds were the only ones with a rate of return over 10 percent. Other high-yielding products include gold-related funds, which marked 6.8 percent rate of return, domestic bonds and exchange-traded funds and healthcare funds, at 4.7 percent.
Other conventional funds, or those investing in natural resources, farm produce and raw materials, all showed losses of around 15 percent. Domestic stock-invested funds were down 2.9 percent on average and overseas stock-type funds 9.9 percent.
The research included four luxury-invested funds ― the Korea Investment and Securities' Luxury Securities Investment Trust, the IBK Luxury Lifestyle Securities Feeder Investment Trust, the Woori Global Luxury Securities Investment Trust and the Global Rich Together Equity Investment Trust. They are small in scale, at around 45 billion won altogether.
The share prices of luxury brands have also been on the rise despite a drop in the European stock market.
The size of the worldwide luxury market is estimated at around 185 billion euros as of 2011, an 8 percent increase from the previous year. Since luxury brands rely on existing loyal customers, the stocks of such brands are considered less affected by economic situation.
"Luxury goods are not as popular in Europe as they used to be. But they are in high demand in emerging Asian markets including China, India and Korea and the increase in new markets has resulted in their revenues," Yang Eun-hee of Korea Investment and Securities said.
"Luxury-invested funds are more volatile and investors should not put more than 10 percent of a portfolio into them."