Luxury Market Enters Normal Growth Stage In The Four Quarter Or Resurgence

Investor entry strategy can be considered in September when the market callback time to build warehouse, to the four quarter or harvest.

Because the industry is not optimistic in the medium and long term, it is only a chance to grasp the stage. After holding it for one to two quarters, it may consider quiting.

In the world, it is defined as "a kind of consumer goods that is beyond the scope of people's survival and development needs, unique, scarce, rare and other characteristics", also known as non life necessities.

After the financial crisis in 2008, the purchase of Chinese consumers supported the rapid growth of the luxury market, and the funds invested in luxury goods also performed well.

But with the weakening demand in China, the global luxury market has been hit hard, and the funds invested in luxury goods in 2014 also performed poorly.

At the present time, we believe that in the four quarter of the peak season of traditional sales, the luxury market will have a chance to breathe.

Two domestic luxury funds invest in different regions and targets. Understanding these differences is the key to understand the difference of fund performance.

Global

Market enters normal growth stage

Although the weakness of China's demand makes the development of global luxury goods uncertain, we believe that the trend of global economic growth can ensure that the luxury industry maintains a certain growth rate.

Europe and the United States are the traditional luxury consumer market. Although the European economy continues to slack, the strong recovery of the US economy, which occupies an important share of luxury consumption, has played a supporting role in the consumption of luxury goods.

The US economy has made significant progress and the labour market has continued to recover.

In the second quarter, the initial GDP value of the United States increased by 4% at an annual rate, much higher than the average forecast of economists.

In the second quarter, the core personal consumption expenditure increased by 2% at an annual rate, up from 1.2% in the first quarter.

As a traditional luxury consumer market, Europe and the United States maintain a relatively stable consumption level each year, which has cushioned the decline of the global luxury market.

Although China's economic growth has encountered some difficulties, it has maintained a relatively high growth rate in absolute terms of growth. The government is also expected to introduce corresponding policies to promote economic growth, and China's economic growth prospects should remain optimistic.

As an important market for traditional luxury goods, Japan is in the extreme.

Under the monetary policy, the stimulus to the economy has improved, which has promoted the consumption of luxury goods to a certain extent.

Therefore, in the medium to long term, we believe that the global luxury market is entering a new stage and will enter a stage of normal growth.

Standing at the time of the three quarter of 2014, we believe that in the short term, the luxury industry is expected to have a breathing space.

On the one hand, in the face of the downturn in the industry, luxury brands have taken some measures from strategic and tactical aspects.

For example, CHANEL and other brands have returned to the US market, betting on the current and long-term growth potential of the US market, and the US economic growth is also strong.

In addition, big players are betting on the US market, and Chinese and tourism sales are growing rapidly.

On the other hand, in order to increase profit margins, some products are still rising.

Although the global economic recovery has been slow in the past year, the downward trend of luxury goods is obvious, but it has not affected their habitual price rise.

The annual price rise of luxury brands has become a habit, including brands such as Hermes and Louis Weedon (Louis Weedon store), which sell their own counters every year.

Since mid April 2014, luxury goods including Chanel, Ferragamo and Cartire have all gone up, including Chanel's increase of 15% and Cartire's price rise of 6% to 10%.

Generally speaking, the company's price is attributed to a series of operating costs such as raw material prices, labor costs, logistics and opening stores.

The industry believes that under the global economic downturn, luxury brands have their brand image to maintain and guarantee their high profit margins. On the other hand, in order to boost their performance, luxury brands are also delineating consumer loyalty and brand image through cross-border activities.

In the face of the global economic downturn and declining sales, luxury brands are also raising high profit margins.

In addition, the fourth quarter of Europe and the United States usher in the traditional peak season, the global luxury market is expected to usher in a temporary breathing machine.

The fourth quarter of the year is the peak season for luxury consumption in the US and Europe. After the downturn in the first few quarters, the luxury industry is expected to usher in a temporary turning point.

The four quarter of the year, especially in November and December, is the traditional peak season of consumption in Europe and the United States. From the historical data, the consumer goods market is doing well in this period, and high-end consumer goods are also expected to have a breathing space at this time.

Two differences in global high-end consumer goods fund

At present, there are two domestic investment funds for high-end consumer goods in the world, namely, the rich countries' global top consumer goods fund established in 2011 and the Yi Fang Da standard global high-end consumer goods index fund established in 2012. The former is an active management fund and the latter is an index fund.

One is "top consumer goods", the other is "high-end consumer goods", which indicates that the scope and target of the two investments are different.

The benchmark index of the world's top consumer goods fund is the Dow Jones Luxury Index, which is more balanced in terms of regional allocation. The US market weight is 25.45%, the German market weight is 25.02%, the French market weight is 20.62%, and the Swiss market weight is 15.99%. The benchmark index of the global high-end consumer goods index fund is the S&P GLOBAL LUXURY INDEX. The index of the US market is 40.1%, Germany is 16.7%, France is 12%, Switzerland is 8.2%.

In the past few years, the performance of the US market has been better than that of the European market. Therefore, the S & P global high-end consumer goods index, which is more weighted in the US market, is better than the DJs luxury index with a balanced configuration.

From the past few years, the S & P global high-end consumer goods index is better than the Dow Jones luxury index.

The S & P global high-end consumer goods index over the past 5 and 3 years is 23.15% and 12.41%, respectively, while the Dow Jones are 17.14% and 5.69%, respectively.

The returns of the S & P global high-end consumer goods index in 2011, 2012 and 2013 (2013 stores) were -1.78%, 26.37% and 35.54% respectively, while the Dow Jones luxury index was -9.33%, 25.96%, 21.35%.

To understand this difference, we can objectively see the difference between the performance of two luxury funds.

Wells Fargo, the world's top consumer goods fund, launched its weakness in 2011, and achieved good returns in the next 2012 and 2013 years.

The fund was actively managed, but it lagged behind the index in 2012 and 2013.

On the basis of the Dow Jones luxury index, the fund sets up a company with high-end consumer goods and brand moat outside the high-end consumer goods industry.

It usually maintained about 90% of the stock position, relatively stable, relatively balanced allocation area, the proportion of the former ten big positions in net assets was 38.97%, the latest heavy warehouse stocks were Daimler Chrysler (5.62%), BMW (BMW store) (4.89%), and Jinsha China (4.38%).

The purchase fee of the fund is 0.6% after the sixty percent off discount, the management fee is 1.80%, the custodian fee is 0.35%, and the redemption fee is 0.5%.

After the launch of the global high-end consumer goods index enhancement fund in the second half of 2012, Yi Fang Da Da made a substantial return for investors.

In the second half of 2012 and 2013, 7.6% and 31.51% respectively.

On the basis of controlling the tracking error, the fund can obtain excess returns through the stock selection strategy through the stocks with high expected earnings and low expected returns. However, the fund's enhanced index is generally less effective than the benchmark index (Table 2).

The purchase fee of the fund is 0.24% after the eighty percent off discount, the management fee is 1.5%, the custodian fee is 0.3%, and the redemption fee is 0.2%.

In the three quarter, if the sales data of the high-end consumer goods industry were lower than expected, there might be a downward adjustment in stock prices, which might provide a better opportunity to buy funds.

With the advent of intensive holidays in the fourth quarter, the unique market opportunities for high-end consumer goods industry may emerge. The historical performance of benchmark index also shows that the industry's performance in the second half of this year is obviously better than that in the first half, and investors can focus on the four quarter of the high-end consumer goods fund.

Entry strategy can be considered in September when the market callback time to build warehouse, to the four quarter or harvest.

Because the industry is not optimistic in the medium and long term, it is only a chance to grasp the stage. After holding it for one to two quarters, it may consider quiting.

It should be reminded that the QDII fund redemption fund expires in about two weeks.