What do you give the richest man in the world for a present? How about a 12 per cent bump in the share price?
That's how the new year has started for Bernard Arnault, sometimes described as the world's richest person, and the shares in question are those of LVMH, the luxury goods company he founded.
Economic stagnation - particularly in countries like China - is not typically associated with a boom time for luxury goods, and with this in mind Asset Allocator has had a peek at our databases to help us understand the true extent of DFMs’ exposure to the European designer brands market.
And it seems the European fund managers to which our allocators have most exposure are decidedly underweight designer gear, at least in terms of the portfolios they run.
The IA Europe ex-UK sector has an average exposure to consumer goods of 20 per cent - the sector's biggest average exposure.
But of the five most popular European equity funds, all but one are dramatically underweight this sector and only one has LVMH among its biggest holdings.
Their average exposure to the consumer goods sector (of which luxury goods will only be one part) is 13 per cent.
Giles Rothbarth’s £3.9bn BlackRock European Dynamic, the most popular European equity fund in our database, is the fund which has made a big bet on consumer products with a 23 per cent exposure and a 4.9 per cent stake in LVMH (and two slightly smaller positions in Hermès and Pandora).
Meanwhile, Montanaro European Income avoids luxury brands entirely, though this is more down to its small-cap bias than anything else. You can read about the idiosyncrasy of this particular offering in more depth here.
The fund with the smallest allocation to consumer goods is Lightman European, a fund which has been gaining popularity in our database since it was set up by former Neptune manager Rob Burnett in 2019.
Burnett instead opts for large exposures to mineral companies such as Equinor, Antofagasta and Galp Energia.
DFMs’ relatively modest allocation to European luxury goods is a stark contrast to their penchant for anti-obesity drugmaker Novo Nordisk. Our number-crunching shows the top five most popular active European funds in our database hold an average exposure to Denmark of 8.6 per cent and an average exposure to Novo Nordisk of 5.3 per cent.
