A few Wall Street firms and stock exchanges have launched luxury indexes, or “blingdexes,” that track stocks of companies that cater to the wealthy. Proving that the rich really are getting richer, these indexes are booming, The Wall Street Journal reports. Although the indexes are new to the market, most of their sponsors have backtracked their performance. Between 2001 and 2006, most of these luxury indexes would have returned an average of at least 13% a year. Looking at another barometer, high-end department stores, analysts note that same-store sales for Saks Fifth Avenue and Barneys are double the retail sector’s average, while their profit margins and revenue are also outpacing the broader markets. Last week, Merrill Lynch launched a luxury index of its own, called the ML LifeStyle Index. “The common denominator for all the stocks selected in our sample is they benefit from the increasingly hedonistic and eclectic consumption patterns,” said Antoine Colonna, an analyst with Merrill Lynch who helped create the index. Comprised of 15 to 20 stocks, it currently includes BMW, Porsche, LVMH, Bulgari, Coach, Burberry, Tiffany, Sotheby’s and Julius Baer. Backtracking the index’s performance, it was up 23% in 2005, 12.5% in 2006, compared to the MSCI World Consumer Discretionary Index’s respective 14% and 7% rise. Another recent entrant is Citibank, with its Plutonomy Index that launched in 2005. Citi also retroactively calculated the index’s performance and found that it would have risen an average of 17.8% a year over the past 20 years. However, the index’s creator, Ajay Kapur, recently left the firm to start a hedge fund, and Citi has since discontinued the index. “Today, the good life is defined by the assets you have,” said Margaret Mager of Goldman Sachs, which runs the Goldman Sachs High-End Consumer Index. “It’s your homes, your cars, how you look, what you wear, who you socialize with, what you eat and drink and, ultimately, how important your art collection is. This is definitely fueling the growth in the luxury market and these indexes.” The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
Processing Content
