China Gets Its First Luxury Fund

on June 14 2011 | in Trends | by | with No Comments

The unrelenting luxury market in China has garnered an endorsement from China’s domestic investment community.

Fullgoal Fund Management of China will launch a fund investing in global luxury brands, becoming China’s first QDII (qualified domestic institutional investor) fund that focuses on luxury brands.

Just as Chinese consumers are able to buy top international luxury goods, now Chinese investors will have access to prestige brands such as LV and Gucci through the fund.

Fullgoal considers the China luxury market an attractive investment opportunity for two key reasons: luxury brands have a competitive edge and provide high gross profits. It’s betting that fortunes of these global luxury companies will continue to climb and its investors will benefit plenty.

Initial investments will be in stocks of manufacturers and retailers of diamonds, fashion and high-end jewelery brands under the MSCI. The fund will use the Dow Jones Luxury Index to gauge its performance.

The Dow Jones Luxury Index gained 57% and 102% in the past two years according to Fullgoal.

The Chinese luxury boom still has more growth ahead. “CLSA Asia-Pacific Markets forecast that by 2020 demand for branded luxury goods in the greater China area will expand by 44% from current levels and that China will contribute 50% to the growth of the global luxury industry within a decade” as reported by WantChina Times.

Luxury sales in China reached $12 billion in 2010 according to McKinsey & Company.


image credit: simon q

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