Did you know? You can invest in a hedge fund for Hermès bags
What was once just a coveted fashion item is now emerging as an unexpected addition to investment portfolios, as a hedge fund has recently been launched exclusively to Hermès bags.
In a report by Forbes, wealth tech company Luxus has started a hedge fund focused on investing in luxury handbags, specifically in Hermès' Birkin and Kelly bags, making them "investment-grade assets."
The company's founder, Dana Auslander, said of the new venture, "My passion was always to create financial products and alternative investments, so it was mostly hedge funds, private equity, private credit. But I've always loved the fashion girlies and try to inject a little bit of fun into the boring private equity and hedge fund worlds."
"My thesis is very simple: The investor and the collector are the same person, so you have to cater to them in the same way, and they want to be able to also invest in the assets that they collect, whether it's art, whether it's jewels, whether it's Hermès. Trust me, a lot of people collect Hermès," she added.
Aside from that, their goal is to "disrupt" private wealth management by offering alternative investments in luxury goods.
"Alternative assets are really, really important right now. I think Gen Z and Millennials care less about owning the bags and more about investing in them or the experience of going to the auction and being able to feed off the energy in the room," Auslander said.
The initial fund has now raised $1 million (P58 million) in May and realized a 34% net ROI, with a 43-day average resale timeline.
The report detailed that the hedge fund had an "overwhelming demand" from the public, leading Luxus to create a second fund that raised $2 million (P117 million). And this was achieved only through word-of-mouth.
British auction house Christie's is backing the fund. Rachel Koffsky, the company's international head of handbags and accessories, said that the Hermès Birkin and Kelly bags have "demonstrated resilience and appreciation."
"Over the past decade, prices have increased by an average of approximately 5% annually. During the pandemic, as demand surged, prices climbed rapidly," she said.
"Although certain styles experience fluctuations based on trends or availability, the overall trajectory of the secondary market for Hermès Birkins and Kellys has been steadily upward," she added.
Forbes noted that one of the reasons that Hermès bags are so coveted is because they "remain exclusive," explaining that people must be invited in order to walk into an Hermès store and purchase a Birkin or a Kelly bag.
Auslander assured that the bags they purchase are "very, very specifically bought" and are in "pristine condition."
Those who invest in the hedge fund can get first dibs on the bags that Luxus acquires for the fund at a lower price. Both regular Birkin and Kelly bags sell for more than $10,000 (P587,255).
Hedge funds are groups of investments managed by professionals who try to grow their clients’ money using a wide range of strategies. Unlike regular investment funds, hedge funds can buy and sell many different types of assets and take more risks in hopes of earning higher returns.