How to invest in one of worlds top industries
Fashion is big business and getting bigger. Many well-known companies within the industry such as Nike, Lululemon, and LVMH have enjoyed strong growth in recent years and are showing no signs of slowing down. Let’s take a look at what is driving this growth and see how investors can gain exposure to this exciting industry through eToro’s FashionPortfolio.
An enormous industry that is growing rapidly
Global fashion revenue grew from $360 billion in 2017 to $525 billion in 2019, and is currently worth over $700 billion. Looking ahead, experts expect the industry to surpass $1 trillion by 20251. There are a number of factors driving such powerful growth.
The influence of technology, especially social media
In recent years, advances in technology have propelled fashion in a number of ways, taking the industry to new heights.
Thanks to social media platforms such as Instagram, Facebook, and YouTube, fashion is now far more interactive and accessible than it was in the past, when we could only catch a narrow glimpse through glossy magazines and designer catwalks.
Advances in e-commerce technologies have also made it much easier to buy fashion goods online. For example, through Instagram’s ‘checkout’ function, users can now make an immediate purchase directly from a post. Meanwhile, payment companies such as PayPal have made the online shopping experience more secure and reliable.
Rising wealth in Asia
Another key growth driver for the fashion industry is the rising level of wealth across the Asian continent. With incomes in countries such as China and India increasing rapidly, consumers have shifted their focus from essential goods to more discretionary items such as fashionable clothing and accessories.
Today, China now generates the most fashion revenue globally, with sales for 2020 expected to reach $349 billion2 — nearly three times as much as in the US.
Demand for athletic fashion
The ‘athleisure’ trend — clothing that is designed to be worn both for exercising and for casual everyday wear, such as yoga pants, leggings, and sweatpants — has arguably captivated consumers more than any other over the last decade due to an ever-increasing focus on health and wellbeing. In 2018, the athleisure market was valued at around $155 billion and, according to industry experts, it could be worth nearly $260 billion by 20263.
Related to the athleisure trend is a high demand for athletic footwear. Today, sneakers can be found anywhere from boardrooms to the catwalk. In the US, sales of athletic shoes are close to surpassing sales of formal shoes, and sales of designer sneakers are booming worldwide. Revenue from athletic footwear alone could be worth close to $100 billion by 20254.
What about Covid-19?
The pandemic has impacted the global fashion industry in several ways. Firstly, it has accelerated the shift to online shopping, since malls and stores across the world closed during lockdowns. The result was about five years’ worth of online growth in about six months.
Secondly, it has changed the way people dress. With more people now working from home, demand for comfortable athleisure and loungewear has skyrocketed. At the same time, demand for office wear, such as suits and formal shoes, has declined. With the work-from-home trend set to accelerate in the years ahead, demand for casual clothing is likely to remain elevated.
Investing in fashion
Given the growth of the fashion industry, it stands to reason that the sector is likely to present many opportunities for investors in the years ahead. Picking stocks in this sector, however, has its challenges. The fashion industry is very broad and encompasses a wide range of product categories. In addition, the fashion industry is highly competitive and trends can be very fickle.
Ultimately, picking just one or two fashion stocks for a portfolio is a risky strategy. A more sensible approach is to invest in a thematic portfolio that offers diversified exposure to the sector.
eToro’s FashionPortfolio: exposure to the world’s top fashion companies
Designed to offer long-term investors the chance to capitalise on the growth of the fashion industry while minimising stock-specific risk, this investment strategy offers exposure to a diverse selection of global brands across a wide range of sub-sectors and categories. These include luxury apparel, business and casual wear, sportswear and athleisure, sports footwear, and accessories.
If you are looking for portfolio exposure to this exciting, dynamic, and fast-growing sector, eToro’s FashionPortfolio offers an innovative and cost-effective way to invest.
Your capital is at risk.
This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without taking into account any particular recipient’s investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilising publicly available information.