As many of you reading this are aware, our fund family underwent a change recently. On July 1, the Holmes Macro Trends Fund changed its name and strategy to the Global Luxury Goods Fund (USLUX).

This decision was months in the making, and obviously there was no way we could have predicted that the fund’s debut would coincide with a global pandemic and economic downturn.

With stores having to close or limit foot traffic, not to mention millions of Americans out of work, discretionary spending in the U.S. has taken it on the chin. The bankruptcies are piling up, with the 200-year-old Brooks Brothers the latest to file for Chapter 11 protection.

Although we can’t change the current macro backdrop, we can adjust our interpretation of what a “luxury good” looks like in the age of COVID-19.

There’s evidence that the highest earners are doing the same.

Follow the Money

From the very beginning, one of our goals for USLUX was to seek to track the spending habits of high net worth individuals (HNWI), whose incomes have historically grown at a much faster rate than not just other earner groups but also per-capita gross domestic product (GDP) growth.

Many reports now say that the uber-wealthy have pulled back their spending on non-essential goods and services due to the coronavirus.

But that doesn’t mean they’ve cut spending entirely.

The trick is to determine where they’ve reallocated their discretionary dollars during the pandemic, if not on items such as designer handbags and jewelry. And we believe we’ve cracked it.

The “New” Luxury

The idea came to me as I was replacing my fencing in the backyard. After paying for the materials at Home Depot, I realized that they were among the biggest discretionary purchases I had made in recent weeks, in terms of cost.

Because of the virus, I haven’t been traveling, meaning the spending I ordinarily would have done at hotels and on meals and clothes has been diverted to home improvement projects.