EXCLUSIVE: Luxury Is 'Going For A Critical Turnaround,' Tema ETF CEO Says

The luxury market is at a critical turning point, with a clear divide emerging between legacy brands and aspirational players, according to Maurits Pot, CEO of Tema ETFs.

In an exclusive interview with Benzinga, Pot emphasized that high-end brands like Hermès International SA HESAY and Ferrari N.V. RACE — supported by loyal, affluent clients — are set to outperform, while more aspirational names such as LVMH-Moët Hennessy Louis Vuitton LVMUY and Burberry Group plc BURBY face greater vulnerability due to shifting consumer behavior and economic slowdowns in key markets like China and Europe.

“Luxury is going for a turnaround, and we're seeing a greater differentiation between true luxury and aspirational brands,” Pot said.

With a number of companies underperforming — particularly LVMH, which recently reported disappointing results — Pot highlighted that these outcomes aren’t surprising given macroeconomic headwinds.

Pot stressed that investors should now focus on a clear divide between high-end brands and those catering to more discretionary spending.

China’s Stimulus Won't Save Luxury Outlook

When discussing the impact of Chinese fiscal stimulus, Pot expressed skepticism. He indicated that while there was initial excitement around potential boosts for the market, the real beneficiaries of government spending are likely to be industries more central to China’s economic priorities.

“I think the luxury sector got a premature boost from the China stimulus,” Pot said, “but ultimately not a boost that is really warranted.”

He stressed that the Chinese government will likely prioritize domestic consumption over high-end international luxury, raising doubts about a meaningful rebound in Chinese-driven demand.

India: The Next Growth Driver For Luxury?

Another pressing topic was whether India could fill the gap left by slowing Chinese demand. Pot hinted that India's emerging middle class and growing economic power could be the next growth story.

“As China slows, does Indian luxury demand replace waning Chinese demand? That's a key question for 2025,” Pot added, pointing to India’s growing presence in the luxury space, with brands like Dior investing heavily in the market.

“2024 will likely be a tough year for the luxury sector,” Pot stated, “but I think there’s reason to believe that 2025 could look better, especially if India continues to emerge as a key luxury market,” he added.

Tariffs And The U.S. Election: Potential Impacts On Luxury

Looking ahead to the U.S. elections, Pot shared his thoughts on tariffs and their potential impact on luxury. While tariffs haven't directly targeted luxury goods yet, he noted the possibility of indirect consequences, especially for industrial goods like cars.

“I think tariffs are going to focus on industrial output before consumer goods, but luxury could get caught up in it eventually,” he added.

Holding Cash For Dip-Buying Opportunities

Pot also shared insights into how Tema Luxury ETF LUX is positioned to weather the luxury sector shifts.

“Nearly 20% of the portfolio is in cash,” he revealed, explaining that the fund remains cautious, particularly toward discretionary luxury, which has been hit harder than high-end, timeless brands like Ferrari, Hermès, and Compagnie Financiere Richemont SA CFRUY.

“We’re overweight on really high-end luxury, and underweight on more discretionary luxury,” he said.

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