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BLOG: The festive funds cashing in on Christmas shopping

BLOG: The festive funds cashing in on Christmas shopping
Your Money
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Your Money

An estimated £24bn will be spent online in the run up to Christmas while others will brave the cold and dark to hit the high street shops. But which shares and funds could benefit from the festive shopping boost?

The older I get the faster Christmas seems to roll around. We’re very much at the height of the shopping season. The sensible among us probably have their gifts wrapped and ready to go under the tree – while others will be bracing themselves for hell on earth as they battle the cold, the commute and other customers this weekend. Unfortunately for me, I sit in the latter camp.

With a warm room to relax in and sales one tap away, you can understand why there is plenty of holiday cheer among online shoppers this year. They will spend an estimated £24.1bn online between 1 November and 31 December, according to Adobe. Consumer enthusiasm is, in part, fuelled by the increasing use of flexible payment methods such as Buy Now, Pay Later, while e-commerce is expected to grow by nearly 3% over the period.

Recent research from MoneySuperMarket found that the average UK household will spend more than £1,800 in 2023, that’s triple the amount spent 30 years earlier, even adjusting for inflation.

But who benefits from our holiday spending? Here we take a look at the funds that are holding potential festive winners ahead of the all-important annual shopping bonanza.

The ease of online shopping

Amazon is often the first name that comes to mind for online retailers and it’s the go-to website for millions of shoppers. In 2022, over 30% of online shoppers in the US planned on buying at least half of their holiday gifts on Amazon – the fifth largest company in the world and the biggest retailer and e-commerce player (source: Statista).

It is also one of the largest holdings in CT Global Focus, which is a concentrated, high conviction portfolio of best ideas.

eBay, a holding in Lazard Global Equity Franchise, is another popular e-commerce giant, boasting 132 million active buyers across the world, and it offers a dizzying array of items for sale, with everything from fashion to electrical goods, and power tools to vehicles.

Gifts for the whole family

If online isn’t for you, then it’s best to have a plan of action. I’m going to shop A, B and C to get all the gifts for my family before I even set off.

Next, the British clothing, footwear and home products retailer sells online as well as through hundreds of outlets. In a recent third quarter trading update, the company increased full year profit guidance before tax by £10m to £885m.

Despite over 500 stores in the UK alone, Next reported an almost 5% increase of online sales compared to last year, partly down to its impressive online catalogue.

It’s a top holding in the Artemis Income fund, which has been a stalwart of the UK equity income sector for two decades. This portfolio is a flexible, high-conviction collection of UK stocks, targeting a rising income and capital gain.

For shoppers looking for something special, Danish jewellery brand Pandora is a popular choice. The brand, which designs, manufactures and markets its products in more than 100 countries, is a popular destination for Christmas shoppers. It is the third largest holding in the Liontrust European Dynamic fund.

Finally, Louis Vuitton luggage may not be under everyone’s Christmas tree this year, but it’s been a strong year for luxury retailers. LVMH, which owns Louis Vuitton, alongside Christian Dior, Moët & Chandon and jewelers Bulgari and Tiffany, became the first European company to hit $500bn in June this year – although I should note the price of Louis Vuitton bags scares me.

The firm is a top 10 holding in the BlackRock European Dynamic fund.

Making a Christmas feast

Of course, it’s not just presents that are bought in the run up to Christmas. Families will also splash out on food and drink. It is an important period for supermarkets, contributing a significant chunk of their annual revenues.

Last year, Tesco was a key beneficiary of the move away from higher-end shops, and it will be hoping to repeat the trick this year as inflation bites.

Its chief executive, Ken Murphy, recently declared: “We are committed to doing everything we can to drive down food bills and Tesco is now consistently the cheapest full-line grocer.”

Tesco is one of the largest holdings in Rathbone UK Opportunities, which has been managed by Alexandra Jackson since 2014. This is a flexible fund that aims to deliver a greater total return than the FTSE All-Share Index, after fees, over any five-year period.

An alternative to this is Marks & Spencer, named most popular supermarket for Christmas food in 2022.  Shoppers made 25,000 Google searches for ‘M&S Christmas food’, which was more than double those for its closest rival. The group has also been turning round its struggling clothing division and has been rewarded with a return to the FTSE 100. M&S is a holding in AXA Framlington UK Mid Cap fund.

Paying for it all

Sadly, all this Christmas shopping needs to be paid for. Other potential winners over the upcoming festive period include Visa, the global payments provider.

The firm is a holding in Jupiter Financial Opportunities, where it sits alongside a range of financial companies including stock exchanges, online payment companies and investment banks.

Darius McDermott is managing director of Chelsea Financial Services and FundCalibre