1 global luxury ETF to check out on the London Stock Exchange

The London Stock Exchange is the leading European centre for exchange-traded funds (ETFs), with more than 2,300 of them listed on its main market. These allow an investor to build a low-cost portfolio with exposure to all sorts of megatrends set to play out over the coming decades.

For example, if someone had bought a broad technology ETF 20 years ago, they would have made fabulous returns as the internet and smartphones came to dominate the world. Technology sub-sectors like cybersecurity and semiconductors have also done well.

However, top thematic ETFs don’t have to just be technology-related. There are plenty of megatrends playing out across the global economy, including the following one.

Rising billionaire numbers

According to a recent report by UBS, there are now 2,919 billionaires in the world, up from 2,682 in 2024. Some of this wealth was inherited and some was self-made by entrepreneurs.

But the inherited portion was the largest such transfer since the Swiss bank began tracking in 2015. And over the next 15 years, it expects at least $5.9trn to be passed on to billionaire heirs.

Note this doesn’t cover wealth passing among ‘merely rich’ people (£100m, for example). So this all points to more ultra-high net worth individuals in the world.

Global luxury ETF

Looking ahead then, I think it’s safe to assume that a fair amount of this inherited wealth will be spent on luxury goods. And this makes Amundi Global Luxury ETF (LSE:LUXG) an interesting investment option, in my opinion.

It holds the crème de la crème of luxury stocks, including LVMH (Moët Hennessy Louis Vuitton), Richemont, Hermès International, and Ferrari. These own many of the most powerful ultra-luxury brands on earth.

For example, Richemont owns Cartier while Hermès is the French firm behind the Birkin bag (the world’s most coveted handbag). Like Ferrari, they purposely limit supply to keep demand exceptionally high. Needless to say, they don’t do grubby mass-market advertising.

Thanks to its unique business model, Hermès is pursuing its long‑term development strategy based on creativity, maintaining control over
savoir‑faire and singular communication.

Hermès, H1 2025

We have to stay true to our founders strategy, which is to always sell one car less than the market demands.

Ferrari CEO Benedetto Vigna

Due to this scarcity, their highest-end products have become collectors’ items. In July, the original Birkin bag sold for €8.6m (£7.4m) at auction, while more than 50% of new Ferraris are sold to clients who already own multiple Ferraris (ie, super-rich collectors).

Elsewhere in the portfolio, there’s Royal Caribbean Cruises, L’Oreal, and luxury hotel chains Marriott and Hilton. So it taps into the luxury theme from quite a few different angles.

Risks, doubt

The ETF is up by 124% since 2014, but it goes without saying that this performance will not necessarily be repeated. And while the upper end of luxury seems largely immune to recessions, the rest of the portfolio might not be (cruises, hotel stays, etc). So a severe downturn would be a risk to performance.

However, taking a long-term view, I think the ETF will do well as this $5.9trn of wealth is passed down and more people become multi-millionaires (particularly in Asia).

In my view, it’s worth considering alongside other thematic ETFs capturing wealth-building global trends.

The post 1 global luxury ETF to check out on the London Stock Exchange appeared first on The Motley Fool UK.

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Ben McPoland has positions in Ferrari. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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