Benchmark Illusions: The Case Against Narrow Equity Benchmarks

What should equity funds be measured against?

May 2026. Reading Time: 10 Minutes. Author: Nicolas Rabener.

SUMMARY

  • Most equity products should be benchmarked against the global stock market
  • If the strategy underperforms, then it does not deserve an allocation
  • The only exception is diversifying equity strategies

INTRODUCTION

The Global Luxury Goods Fund (USLUX) offers investors exposure to iconic luxury companies such as LVMH, Hermes, and Ferrari – brands whose products are often out of reach for most consumers. A small Birkin bag from Hermes, for example, can cost well over $10,000. Even for those who can afford it, purchasing one is not straightforward: Hermes sells these bags selectively, often requiring years-long waiting periods. On the secondary market, prices frequently double or even triple.

From this perspective, USLUX presents an elegant way to gain access to the economics of luxury goods and participate in the high-margin business behind these brands. The minimum fund investment is relatively accessible at $5,000. However, the fund charges a steep annual management fee of 1.75%, meaning it must generate strong returns to justify the cost.

USLUX also serves as a useful case study in the complexity – and limitations – of selecting appropriate benchmarks for funds, a topic we examine in this research article.

PERFORMANCE OF THE GLOBAL LUXURY GOODS FUND (USLUX)

USLUX is managed by U.S. Global Investors and has a track record dating back to 1994. On the fund’s website, the benchmark is listed as the S&P 1500 Composite, while the factsheet references the S&P Global Luxury Index. Both sources note that prior to May 2020, the fund operated as the Holmes Trends Fund (MEGAX), which followed a different investment strategy altogether.

Despite this, the factsheet presents a 10-year performance comparison against the S&P Global Luxury Index – even though roughly half of that period reflects a portfolio that was not focused on luxury stocks. This communication creates a misleading impression for investors.

A fairer comparison would begin only from May 2020, when the fund adopted its current luxury-focused strategy. From May 2020 through mid-2024, the fund underperformed the S&P Global Luxury Ind