Luxus Luxury Asset Investment Firm Launches Birkin & Kelly Hedge Fund.

As the title indicates, it's now possible to buy an interest in a Hedge Fund pinned to the value of Hermes bags.  This might seem novel, however, as the luxury goods market becomes a global aspiration, investment funds linked to a particular type of luxury good are in fact becoming increasingly common.  In South Korea the investment platform Piece launched in 2021, which links its value to luxury watches such as Rolex's.

Indeed, it might be suggested that buying stock in a luxury goods company is roughly analogous to investing in the pieces it produces.  After all, it's entirely right that luxury goods companies produce luxury goods, therefore investing directly in their output is little more than jumping one step.

Yet however logical might wish to be, it seems somehow perverse to invest directly in luxury goods.  The Veblen goods theory might propose the desirability increase with the price, but that doesn't change the fact that these are perishable, consumable, goods.  Leather rots, steel rusts, and mechanisms wear.  The logic in respect of the luxury goods companies also doesn't operate.  As these are businesses with earning calls that pay dividends.  No matter what, barring bankruptcy, you will always own said stock.  The same can't be said for a bag or watch.

In an article within Forbes the creator of the Hedge fund waxed lyrical about the first Birkin selling for $10.1 million in Christies.  Stating this was their motivation.  It's difficult to square that circle, and understand how they extrapolate a one of a kind piece meaning all mass produced handbags merit investment.  Because despite Hermes clever marketing, these are mass produced bags.  

We see this going  nowhere fast, and in our view, that's a good thing.