Followers of fashion: investment trusts indulge in luxury brands
From designer labels to luxury goods, managers discuss their holdings ahead of London Fashion Week.
As London Fashion Week gets underway on 19 February, hundreds of journalists, buyers and followers of fashion will descend on the UK’s capital to celebrate fashion and creativity. Ahead of this, the Association of Investment Companies (AIC) has asked investment trust managers about their holdings in Burberry and international brands, Brunello Cucinelli, Christian Dior, LVMH and Richemont.
As London Fashion Week gets underway, investment trusts offer a tried and tested route for investors who want to profit from fashion’s enduring appeal.
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC)
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Luxury fashion brands command major buying power and brand loyalty. Although regional demand can ebb and flow in important markets like China, these brands have proven their ability to adapt across market cycles. As London Fashion Week gets underway, investment trusts offer a tried and tested route for investors who want to profit from fashion’s enduring appeal.”
Madeline Wright, Deputy Portfolio Manager of Finsbury Growth & Income, said: “Burberry is a very rare thing indeed as perhaps the only true British luxury fashion brand. It enjoys a heritage stretching back nearly 170 years and occupies a unique position as the global ‘king of trench coats’ – totally synonymous with luxury outerwear. Such brand equity is rare on a global basis and especially so with a UK listing. We have held Burberry in our portfolios since 2008 and believe that by continuing to own Burberry equity, we own something unique and of enduring value.”
George Cooke, Manager of Montanaro European Smaller Companies Trust said: “We hold Brunello Cucinelli because it’s a textbook quality franchise: founder-led, brand-driven, disciplined in growth and highly profitable. We first bought the stock in early 2016 at around €16 per share and it has since compounded strongly, reflecting the durability of the business, supported by selective category extension and carefully paced geographic expansion.”
Joe Bauernfreund, Manager of AVI Global Trust, said: “We have held Christian Dior since 2020 – the French-listed mono-holding company through which the Arnault family control LVMH. In the second half of 2025 the sector rallied significantly in anticipation of an improving growth outlook. In 2026 we have seen some of this given back. Whilst we took some profit in the autumn, we continue to see an attractive outlook for what is fundamentally a highly attractive sector which has suffered from cyclical – not secular – headwinds.
“Over time LVMH has emerged from downturns stronger and we expect this to be the case once again. Cost control has been very tight with significant margin expansion potential as volume growth kicks in, and the pristine balance sheet gives optionality for opportunistic and value enhancing M&A.”
Recent sell-offs
George Cooke, Manager of Montanaro European Smaller Companies Trust, said: “We see recent volatility as largely cyclical rather than structural. For the strongest brands, cash generation, balance sheet strength and long-term growth remain intact.”
Madeline Wright, Deputy Portfolio Manager of Finsbury Growth & Income, said: “Certainly, Burberry has made missteps in execution. In hindsight, the brand strayed too far from its roots as a solid British luxury brand and attempted to push too hard into categories in which it had limited brand authority, such as the highest-priced tier of leather goods. The fact that this happened whilst the luxury consumer was in turmoil made the situation particularly difficult.”
Bullish or bearish?
Zenah Shuhaiber, Co-Manager of JPMorgan European Growth & Income Trust, said: “We are cautiously optimistic for 2026, as the industry appears to have reached a cyclical trough in mid-2025 and is now entering a period of selective, quality driven growth. While we see green shoots in the US and China, recovery remains volatile and increasingly K-shaped, with ultra high net worth consumers showing the most resilience. A key catalyst for this renewed demand would be a shift away from ‘quiet luxury’ toward a ‘bold space’ where more expressive branding and creative newness would be tempting consumers back into the market.
“In our portfolio we continue to have a preference for Richemont, a leading luxury goods group, which reflects a structural shift toward ‘hard luxury’ – jewellery and watches – which consumers increasingly view as durable stores of value compared to more trend-sensitive apparel. While the recent sell-off in luxury stocks contains some cyclical noise as earnings expectations reset, it also highlights fundamental risks like pricing fatigue and potential US tariffs that require a more disciplined approach to stock selection.”
David Moss, Manager of CT UK High Income Trust, said: “We are constructive on the luxury industry and still believe that consumers value luxury brands but are not expecting a return to the very strong growth of a few years ago.
“Our thesis very much centres on the turnaround that CEO Josh Schulman has begun that focuses on Burberry’s core brand principles and iconic product lines such as the trench coat and further thoughtful repositioning. We understand this may take some time but believe that it will deliver sustainable growth independent of underlying luxury demand.”
George Cooke, Manager of Montanaro European Smaller Companies Trust, said: “We remain constructive on the high end of luxury. Structural wealth growth, scarcity, craftsmanship and tight control of supply all support long-term pricing power and margins for the very best brands. Brunello sits at the absolute top end of the spectrum, with its closest peers being Loro Piana and Ermenegildo Zegna.”
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Notes to editors
- The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 276 members and the industry has total assets of approximately £268 billion.
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