Robb Report ETF (ROB): Who's who of luxury brands

Says Tracy, "While a swift downturn in the economy might take its toll on discount retailers, it is generally acknowledged that wealthier consumers won't exactly feel the pinch."

In fact, he adds, most will continue to "sip the finest champagne, visit the most exotic resorts, sail the sleekest yachts, and shop at the trendiest boutiques."

And, he contends, growth in the market for luxury goods looks to be strong going forward. Around the world, the number of households with at least $1 million in liquid assets has doubled over the past decade.

The advisor explains, "Because ROB just hit the market, the fund has no established track record, but companies that cater to the rich generally have some favorable characteristics: entrenched brand names, loyal customer bases, strong pricing power, and lofty profit margins."

He continues, "Regardless of the ebbs and flows of the economy, wealthy consumers will shell out about $150 billion on luxury goods this year. Should that forecast pan out, then some of that wealth will find its way into the hands of ROB shareholders."

He concludes, "Considering most luxury retailers are somewhat recession-resistant, the fund's portfolio holdings aren't likely to be greatly damaged by a slowdown in the global economy. Still, given its narrow focus, the fund would be more suitable as a niche portfolio addition rather than a core holding."

[photo Swamibu]

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