GAM Luxury Brands

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GAM Luxury Brands seeks to deliver long-term capital appreciation by actively investing in 25-35 luxury companies globally. The fund invests in well-capitalised companies that have compounding revenue growth at high and stable margins at their core. Such companies are typically highly cash-generative with conservative balance sheets that render them ideally situated to return capital to shareholders and / or engage in opportunistic and value-creating M&A.

Imagine a flower where the core of the flower is the luxury brands, and then the petals represent the luxury ecosystem.”

Our Edge

Experienced, high calibre team

Flavio Cereda has over 30 years of investment experience in the luxury sector. He has deep knowledge of the brands, their supply chains, distributors and retailers across all markets as well as insights into the sector informed by multi-year social media trend tracking.

Differentiated approach

Our concentrated portfolio invests across a variety of subsectors within the luxury goods industry, spanning goods and experiences: fashion and accessories, watches and jewellery, wines and spirits, luxury travel and hospitality, premium sporting goods, online disruptors, luxury autos and retail. We actively search the market for new opportunities in the products and brands that luxury consumers are gravitating towards.

Active stock selection

Our portfolio is bottom-up and driven by rigorous fundamental analysis of the entire value chain. This focus sets us apart from the more top-down approaches of other funds, which by definition fail to exclude companies losing ground in a competitive environment.

Valuation Discipline

Our disciplined approach to company valuation protects clients from sharp falls when overhyped stocks hit reality. Every stock is carefully analysed and our structured and replicable investment process generates an absolute target price.

Investment Team

GAM Luxury Brands is led by Flavio Cereda, Investment Director. Flavio has overall responsibility for the investment strategy, portfolio construction, research management and luxury sector research.

The team works as a focussed, nimble group of investors bound together by a highly collaborative, tight-knit culture. Although research responsibilities are split by broad sector specialisations, team members also work interchangeably across the market. This makes for a stronger and more flexible team, drives interaction and enables knowledge sharing of specific sectors.

The team draws on its long-standing relationships with an international network of industry experts, economists and analysts, as well as a ten-year relationship with leading expert network company Thirdbridge, which enables the team to meet the experts who help build its knowledge on companies and industry sectors as part of its research work.

The luxury sector has always fascinated investors: products that nobody really needs but that more and more want with best-in-class companies that thrive on innovation, momentum and brand strength.

Flavio Cereda

Directeur des investissements

Philosophy and Process

Investment Philosophy

We believe that we can add value through bottom-up stock selection which seeks to identify premium brands with heritage and/or disruption potential and strong pricing power in luxury sub-categories, operating from an unconstrained and global universe. Typically, these companies offer compounding high single digit revenue growth at 15%+ margins and high Return on Capital Employed (ROCE)*, and are thus well positioned to create substantial long-term shareholder value. Given the importance of trends in the luxury industry, we believe rigorous bottom-up analysis of companies and their competitive positioning, in addition to consumer preferences, is critical.

^* Forecasts are based on certain assumptions and market conditions that may change and have a material impact on future results. Forecasts do not represent a prediction of returns or a promise to deliver any particular investment goal. Actual performance may be greater or lesser than these forecasts.

Investment Process

Our investment process is based on detailed fundamental analysis of companies, with ESG carefully considered at every stage.

We define our investment universe broadly, allowing us to identify multiple, complementary sources of alpha. We employ a top-down lens as one part of the idea generation step within the investment process, which helps identify secular themes and industry trends and can help guide the focus of our company analysis.

However, the decision whether to invest in a company or not is always based on fundamental analysis and stock specifics. As part of this process, we meet frequently with company management teams and industry experts, as well as conducting on-the-ground research. We are especially focused on ESG considerations, given their importance to this sector above many others. This detailed approach allows for accurate, risk-adjusted modelling of future earnings, coupled with an absolute valuation target price. Candidates for investment therefore go through a strict competition for capital, which has assessed all potential drivers of a company’s earnings, their ESG status and achievable valuation.

The third step of the process comprises portfolio construction and risk management. An additional layer of ESG analysis is included, considering the portfolio in aggregate. We model and assess overall portfolio risk, and ensure we are aware of all potential correlations within the portfolio.

Top-down analysis

Secular themes, industry trends and company/expert meetings
Identify companies with robust business models and high barriers to entry

Analysis of brand

Focus on competitive positioning, brand equity
Emphasis on strength and visibility eg compounding revenue growth, margins

Portfolio construction

Stock weightings based on conviction
No tracking error limits or benchmark

ESG / Risk management

Focus on corporate governance insights
Sector and country diversification

Reasons to Invest

Secular growth

Increasing wealth and consumption, driven by millennial and Generation Z emerging market (EM) consumers, means premium luxury brands should enjoy sustained, multi-decade growth.

EM exposure

Demand for luxury goods is increasing among newly middle-class consumers in Asia in particular, giving investors the opportunity to access EM growth rates with developed markets (DM) corporate governance via stable and well-established Western brands with high pricing power.

Potential for substantial returns

High multi-year compound growth means the sector has outpaced global GDP and global and EM equities in recent years. We believe this will continue but we expect large dispersion between winners and losers. This is an opportunity for clients to earn significant alpha.

Sustainability

Investors can access the socially responsible theme through the sector, as luxury goods companies are increasingly responding to growing awareness among younger consumers.

Risque

Capital sous risque

: Les instruments financiers engendrent un facteur de risque. Par conséquent, la valeur de l'investissement et le rendement qui en résulte peuvent varier et la valeur initiale de l'investissement investi ne peut pas être garantie.

Risque de change

: La valeur des investissements dans des actifs libellés dans des devises autres que la devise de base sera affectée par l'évolution des taux de change correspondants, ce qui est susceptible d'entraîner des pertes.

Risque de change - Catégorie d'Actions non libellée dans la devise de base

: Les catégories d'actions qui ne sont pas libellées dans la devise de base peuvent ou non être couvertes dans la devise de base du Fonds. L'évolution des taux de change aura un impact sur la valeur des actions du Fonds qui ne sont pas libellées dans la devise de base. Lorsque des structures de couverture sont en place, elles visent à réduire le risque de change, sans nécessairement l'éliminer.

Actions

: Les investissements en actions (directement ou indirectement via des produits dérivés) peuvent être soumis à des fluctuations de valeur, et leur valeur peut être plus volatile que celle d'autres classes d'actifs. Les actions et les titres liés à des actions (tels que les warrants et les droits de souscription) peuvent être affectés par les fluctuations quotidiennes des marchés boursiers.

Risque de marché / pays émergents

: De manière générale, les risques politiques, opérationnels, de marché et de contrepartie sont plus élevés dans les pays émergents.

Risques liés au programme Shanghai-Hong Kong Stock Connect / Shenzhen Connect

: Le Fonds a la possibilité d'investir dans des actions A chinoises via le programme Shanghai – Hong Kong Stock Connect / Shenzhen Connect qui peut présenter des risques règlementaire, opérationnel, de contrepartie ainsi que de compensation et de règlement supplémentaires.

Risque spécifique à certains pays/à la Chine

: Il s'agit du risque d'évolution du contexte politique, social ou économique de la Chine et de son impact potentiellement important sur la valeur des investissements du Fonds. La législation fiscale chinoise est également appliquée dans le cadre de politiques susceptibles d'être modifiées sans préavis et avec effet rétroactif.

Liste non exhaustive

: Cette liste de facteurs de risque n'est pas exhaustive. Il est recommandé de se référer au prospectus du fonds concerné.

Our Thinking

Fund Information

Contacts

Pour vos contacts locaux, veuillez sélectionner votre pays ou visitez notre page Contacts et Emplacements.

Mentions légales: Les performances passées ne sont pas un indicateur des performances futures ni des tendances actuelles ou futures. Les indications pourraient se fonder sur des chiffres libellés dans une devise pouvant différer de la devise de votre pays de résidence et le rendement peut de ce fait évoluer à la hausse comme à la baisse en conséquence de fluctuations de change. Capital sous risque: Les instruments financiers engendrent un facteur de risque. Par conséquent, la valeur de l’investissement et le rendement qui en résulte peuvent varier et la valeur initiale de l’investissement investi ne peut pas être garantie. Aucune référence à un titre financier ne saurait constituer une recommandation d'achat ou de vente de ce titre.