The team believes they 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, the team believes rigorous bottom-up analysis of companies and their competitive positioning, in addition to consumer preferences, is critical.
The process is primarily based on fundamental analysis, supplemented by ESG-aided portfolio construction. However, top-down analysis is also used to identify secular themes and industry trends and identify companies with robust business models. Following the identification of ‘value creators’, detailed industry and company level research is combined with ‘triangulation’. The team participates in a large number of expert meetings annually. This enables them to identify a company’s future earnings prospects, while an absolute valuation approach seeks to determine whether a stock is attractively valued on a fundamental basis. Portfolio construction is supplemented by corporate governance insights and enhanced ESG due diligence.
GAM Luxury Brands is managed by Swetha Ramachandran, who brings over 17 years of investment experience across both developed and emerging markets. She is supported by Niall Gallagher who is responsible for GAM’s European equity strategies and has over 20 years of European equity investing expertise.
Swetha and Niall are responsible for research, portfolio management, trading and risk management. However, an additional risk oversight function is performed independently by GAM’s risk teams.
Established relationships with an international network of industry experts, economists and analysts are key, while leading expert network company Thirdbridge is used extensively for ‘triangulation’, the independent verification of management or consensus data.
The changing nature of the luxury consumer (largely Asian, younger, more online) and of the sub-segments in pole position (experiential, local categories, mega-brands) will drive sustained capital growth for the next decade to come.Swetha Ramachandran, Investment Manager
The value of investments in assets that are denominated in currencies other than the base currency will be affected by changes in the relevant exchange rates which may cause a decline.
Non-base currency share classes may or may not be hedged to the base currency of the Fund. Changes in exchange rates will have an impact on the value of shares in the Fund which are not denominated in the base currency. Where hedging strategies are employed, they may not be fully effective.
Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.
All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.