Why settle for an incomplete basket?

Imagine you decide to only buy American brands on your next trip to the supermarket. When you arrive at the cashier, your favorite beer, shampoo, and chocolate are all missing from your basket.

A portfolio of only domestic stocks is like an incomplete basket. Without international exposure, you are missing some of the best quality companies in the world. In the consumers staples space, several come to mind: Nestle, L’Oréal, and Diageo. In technology: Taiwan Semiconductor, Keyence, and Tata Consulting. In the luxury space, several come to mind: Hermes, Brunello Cucinelli, and LVMH. 

The controlling shareholder of LVMH, Bernard Arnault, is one of the wealthiest people in the world. With a fortune estimated at $230 billion, he did not accumulate his wealth with a home bias approach. Since his early years, Mr Arnault invested with a single-minded focus to acquire and control the best luxury global brands. This was the case with Mr. Arnault’s initial investment in LVMH in 1987, in the Italian jewelry brand Bulgari in 2011, and more recently in Tiffany & Co, the classic American jeweler. LVMH handily outperformed the S&P 500 by almost 5x in the last 20 years.

Indeed, outperforming the market over the long run is hard to do. In fact, only one third of actively managed funds beat the S&P 500 over the last decade, according to a 2022 study published in the Journal of Financial Economics.

We believe that including the top companies in the world – regardless of where they are located – is the best approach for investors to create wealth over the long-term, with less risk.

Important Information: Past performance is not a guarantee of future results. Company discussed herein are portfolio holdings and for illustrative purposes only to elaborate on the subject matter under discussion. Investments referenced should not be considered as a reliable indicator of the performance or investment profile of any composite or client account. Further, the reader should not assume that any investments identified were or will be profitable or that any investment recommendations or decisions we make in the future will be profitable. Information provided should not be deemed a recommendation to purchase, hold or sell any security nor assumption should be made as to the profitability or performance of any company identified or security associated with them.

Forward-looking statements regarding future events or the financial performance of countries, markets and/or investments are based on a variety of estimates and assumptions. There is no assurance that any assumptions made in connection with such projections will prove accurate, and actual results may differ materially. The inclusion of forecasts should not be regarded as an indication that Vontobel considers such to be a reliable prediction of future events and should not be relied upon as such. Vontobel reserves the right to make changes and corrections to the information and opinions expressed herein at any time, without notice,