Life insurance: how to invest in luxury?

The luxury giants are returning to the stock market after a complicated start to the year. They delivered overall exceptional business results in the first half of the year despite several long-term threats. The big jewels like Kering or LVMH currently seem to be sold off in the stock market, their valuation level is a little more reasonable than at the height of the stock market euphoria in 2021, just like the big tech stocks. How to invest easily and cheaply in an upturn in the stock market in the luxury sector? This is what we invite you to discover in this article, with an important investment fund available to everyone.

Outstanding titles and… sold out!

With the record high inflation that we are experiencing, consumption around the world is falling sharply and is gradually leading us towards economic recession. At least in the main areas of commercial activity. Luxury is often an exception with impressive results from the major European groups, and especially French ones, for the first half of 2022. Without being completely exhaustive, let’s e.g. mention the 19% organic growth of LVMH in the second quarter after +23% compared to the first three months of the year. Its margin reached an all-time high of 40.5%.

Luxury companies have a formidable weapon: their “pricing power”. In other words, they are able to easily raise the prices of their products against a background of galloping inflation without any real impact on the demand from their consumers. Thus, even in times of high inflation, they can generate very high margins.

In addition to the cyclical, there is the structural. In this regard, the world’s luxury flagships will also benefit from the explosion of the Asian middle class. Today, China represents more than a third of the world’s demand for luxury goods. As its middle class grows, the Chinese market should represent 47% of global demand by 2025. Luxurious items are no longer reserved for the wealthier classes of the country. Therefore, our flagships’ current dependence on the Chinese market should increase in the coming years.

The Chinese threat is above all regulatory. The “common prosperity” (distribution of wealth) desired by the Communist Party may lead to the stigmatization of foreign products and the establishment of new taxes on these imports. This is the big issue to watch when investing in the luxury sector, in the same way as the zero covid policy and the big city lockdowns that it can lead to.

Changing courses is another threat. The rise in interest rates around the world is punishing stock market performance for so-called growth stocks such as those in the technology and luxury sectors. However, the contraction of the US economy in the second quarter and current forecasts point to more moderate increases in 2023 and even decreases as early as the end of next year, or at the latest in 2024, to counter the economic recession.

We would go so far as to say that the hardest part is over and that investors have now largely priced this risk into the price of growth stocks. But it is clear that since the beginning of the year the French jewels, which are LVMH, Kering, Hermès and L’Oréal, have suffered from these two threats, yielding 8% to 25%. For about two months, a recovery in the stock market has begun on these giants andAn opportunistic investor will see here an opportunity to buy very high quality securities at a good price to hold them for the long term.

How to invest easily and cheaply in this sector? This is what we invite you to discover in the rest of this article.

Experience our life insurance with no entry fees

Which fund to invest in luxury?

The bottom SG Actions Luxe (FR0000988503) was established in October 2002 and invests mainly in large international groups in the luxury sector and to a lesser extent in giants of consumer goods or new technologies. Its targets in the portfolio are currently 34% US, 32% French and 7% Swiss.

The top 5 lines of the portfolio represent 35% of the fund’s total assets:

  • LVMH, consumer discretionary, France: 9.91% of total assets
  • Nike, Cyclical Spending, US: 7.43%
  • Richemont, cyclical consumption, Switzerland: 7.23%
  • Kering, cyclical consumption, France: 5.54%
  • Sony, Technology, Japan: 4.93%

The foundation’s results*:

Source: Quantalys

In the longer term, the fund excels in particular its very good performance. However, since the beginning of the year it has lost around 20%, but a recovery seems to have started in recent weeks (+13.04%* in the last three months).

In detail, the fund’s performance is 153.12%* over ten years, which outperforms its investment category. Over five years, the fund had a performance of 57.72%* and 33.97%* over three years, outperforming its category.

Since January 1, 2022, it has been -17.05%* (-10.50%* over one year)compared to a loss of around 12% for the category in 2022.

MorningStar rates support risk as a medium across all investment horizons, relative to its investment category. Its volatility over the last twelve months stands at 22.19% and 22.54% over three years. The two current managers have been at the head of the fund since 2011 and 2016.

Funds available in our Meilleurtaux Liberté Vie life insurance

How to invest in luxury under the best conditions?

The investment support presented in this article is available without entry fees via Liberté Vie best rate contract, life insurance at very low cost, for better performance on your investments.

With Freedom Life’s best prices, you can invest without payment fees or arbitrage fees in specific themes and sectors of activity : luxury, health, technology, security, raw materials, industries, precious metals… and in all geographical areas, from the most classic to the most exotic : France, Germany, New Europe, Japan, Eurozone, USA, China, India, Taiwan, Switzerland, Singapore, Brazil, etc…

More than 680 units of account* are available in the contract to increase your investments within the framework of free management, including 20 SCPIs, 111 Live Securities and Private Equity Funds to diversify your savings in real estate, the stock market and the unlisted. 132 SRI labeled funds are eligible for the best Liberté Vie rate.

Meilleurtaux Liberté Vie is also life insurance at very low cost, for better performance on your investments :

  • €0 fee input and output (except SCPI/FCPR).
  • 0 € fee on payments (excluding OPCI, SCI and SCPI).
  • €0 fee of the folder.
  • 0.5% administration fee on Unit-linked.
  • All of your online arbitrations are free.
  • A contract rich in support : euro funds, emtn, trackers, sicav, securities, FCPR, SCPI, SCI, etc.

Discover our life insurance Meilleurtaux Liberté Vie

Non-contractual communications of an advertising nature.

* Past results are not indicative of future results and are not constant over time. Investing in shares, bonds or UCITS presents a significant risk of capital loss and must be considered from a long-term perspective, representing a small part of a total inheritance. Unlike funds in euros, the value of these supports, which reflect the value of the underlying assets, is not guaranteed, but is subject to upward or downward fluctuations, especially depending on the development of the financial markets.

** Meilleurtaux Liberté Vie is an individual multi-support type of life insurance, distributed by Meilleurtaux Placement and insured by Spirica (100% subsidiary of Crédit Agricole Assurances), SA with a share capital of 231,044,641.08 euros, a company subject to the Insurance Act, RCS Paris No. 487 739 963, 16-18, boulevard de Vaugirard 75015 PARIS. The guarantees in this contract can be expressed in units of account, in shares of diversification provisions and in euros. For the part that is invested in account units and in shares of diversification provisions, the invested amounts are not guaranteed and are subject to upward or downward fluctuations depending in particular on developments in the financial markets.

The main characteristics of the Meilleurtaux Liberté Vie contract and its various investment options are described in the key information document and the specific information documents available at placement.meilleurtaux.com or on the insurer’s website https://www.spirica.fr.

Leave a Comment