For savvy savers looking to make their money work harder, the age-old adage of 'buy cheap, buy twice' often rings true. While the world's wealthiest may not blink at a high price tag, for most of us, strategic investment in quality over quantity is a cornerstone of financial wisdom. This principle extends beyond a durable winter coat and into the world of investments, particularly the seemingly exclusive realm of luxury goods. The good news? You don't need to buy a Ferrari to potentially benefit from the sector's growth. Instead, you can let specialised funds do the heavy lifting.
Navigating Luxury in Uncertain Times
Consumer sentiment globally faced significant pressure throughout 2025, weighed down by political and economic uncertainty, explains Caroline Reyl, fund manager of the Pictet Premium Brands fund. Typically, such an environment is challenging for luxury goods, yet demand has shown surprising resilience. While aspirational shoppers have been more cautious, higher-end consumers have maintained their appetite for premium brands.
This period has allowed major companies to restructure, innovate, and find new ways to engage customers. Ms. Reyl points to new creative directors at leading fashion houses, partnerships with sports brands, and experiential retail concepts. A prime example is 'The Louis', a groundbreaking Louis Vuitton concept store shaped like a ship in Shanghai, which draws roughly 40,000 visitors on a weekend through cultural exhibits and dining, not just shopping.
Three Funds for Exposure to Premium Brands
For investors seeking to capitalise on this evolving landscape, several funds offer targeted exposure. Here are three highlighted by financial analysts.
Pictet Premium Brands
This fund invests in companies that combine high-quality products and services with strong consumer aspirations. Its portfolio includes giants like American Express, LVMH, Richemont, Hermès, Apple, and L'Oréal. It is suited for those seeking quality holdings and diversification, though it's notable for having minimal technology exposure and a focus on European firms. Ms. Reyl suggests that with new developments across the sector and companies trading at lower valuations, the setup for premium brand consumption looks promising.
BlackRock European Dynamic
Concentrating on European companies (excluding the UK) that appear undervalued or have solid growth potential, this fund holds key luxury stocks like Hermès, Richemont, and LVMH. Billy Ewins, a fund research analyst at Quilter Cheviot, notes that holding the 'higher-high end' names like Hermès can act as a hedge against a softening middle-class consumer market, thanks to their exclusive products' inelastic demand. While many fund managers reduced luxury holdings in 2025, this fund has maintained confidence, particularly in structural changes such as the new designer at Dior (owned by LVMH).
Schroder European Recovery
This fund takes a contrarian approach, focusing on undervalued European companies with recovery potential. It has recently increased its luxury exposure, adding positions like French conglomerate Kering, which owns Gucci and Balenciaga, in the first half of 2025. Jemma Slingo, an investment specialist at Fidelity International, appreciates the fund's disciplined strategy of investing in companies during tough times. She cautions that this approach carries risk but has delivered impressive results historically, making it best for investors with a long-term horizon of five years or more.
A Strategic Approach to Building Wealth
Investing in luxury through these funds offers a route to portfolio diversification and exposure to brands with enduring appeal and pricing power. The key takeaway for 2026 is that despite economic headwinds, the luxury sector has demonstrated resilience and is actively adapting. For investors willing to take a medium to long-term view, and potentially embrace a contrarian stance, allocating a portion of savings to carefully selected funds could be a strategic move towards building greater wealth, without ever setting foot in a boutique.
