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 Q4 2020
U.S. markets finished a volatile year on a high note, and the S&P 500 Index hit all-time highs in the midst of a pandemic. Global luxury goods stocks were affected by the initial Covid-19 sell-off in Q1 2020, but they comfortably outperformed the S&P 500 by the year-end.
- Contributors: An allocation and stock selection in the consumer discretionary sector aided portfolio performance
- Detractors: An underweight allocation to non-consumer sectors, particularly IT, detracted from results this quarter
- Outlook: Consumer discretionary and consumer staples remain the only overweight exposures. Due to a high allocation to global consumer stocks, performance of the portfolio may be sensitive to trends in personal consumption expenditure
Quarter in review
- The Fund outperformed the benchmark, the S&P 500 Index, from inception on November 24, 2020, to quarter-end on December 31, 2020.
- An overweight position in Peloton Interactive, Inc. (2.3% portfolio weighting at inception) was the top contributor as the company’s stock benefitted from the backdrop of a global quarantine caused by the COVID-19 pandemic, and a rising demand for work-from-home health and wellness services. During the quarter, Peloton also released strong Q3 2020 results that significantly exceeded analyst expectations, which was further rewarded by investors.
- Consumer discretionary (74.3% portfolio weighting) and consumer staples (22.9% portfolio weighting) remain the only overweights, as we continue to have conviction in the resilience of global luxury spending.
- The approvals of various COVID-19 vaccines by global health authorities bode well for increased luxury goods consumption, a sizable portion of which has historically been tied to in-person and travel shopping.