Runway-ready investments bag luxury returns

Back in 2006, The Devil Wears Prada movie left many audiences pining for a wardrobe of luxury labels, such as those sported by Anne Hathaway, who played Andy Sachs.

But what if you had invested in the giant firms that own such brands?

Which is the sort of sagacious thing that you suspect Runway magazine editor Miranda Priestly, played by Meryl Streep, would have done.

As the film’s sequel, The Devil Wears Prada 2, hits our screens this weekend, a study by brokers eToro has found a hypothetical Priestly portfolio would have trounced even the high-flying US stock market in the two decades since the first film aired.

Her portfolio of shares in luxury brands would have returned 629 per cent since then, beating the benchmark S&P 500 index – up 442 per cent – and the S&P global luxury index, which has gained 297 per cent.

This is despite the damaging impact of the war in the Middle East on the fortunes of luxury goods companies.

But such has been the resilience of the luxury sector that Priestly’s basket – or should that be a Mini Kelly handbag – of shares would still have returned a very decent 28pc.

The star performer is Hermes, maker of the Kelly and Birkin bags, which gained a massive 2,206 per cent. In the original film Streep’s character is seen with a Mini Kelly bag and Hermes scarves.

Other stand-outs include Ralph Lauren, a Hathaway favourite, with a 539 per cent return over the period, and Richemont, the Cartier group, with 619 per cent.

The 92 per cent return from Burberry reflects the difficulties faced by the iconic British brand before its turnaround began.

Kering, the House of Gucci business, also disappointed, with 149 per cent. On one level the findings demonstrate the value of holding shares in household names and market-leading brands for the long term –whatever the sector. But Lale Akoner, global market strategist at eToro, says that the results also prove the value of backing enduring attributes such as pricing power, rather than passing fads.

‘Hermes has rarely discounted. Ralph Lauren spent years being considered unfashionable by the industry,’ she added.

Prada did not become quoted until 2011, so is not included in the survey.

Since then the company’s shares have fallen by 12 per cent.

Priestly would not be happy!