Investing: Style Notes

Swiss private bank Vontobel is issuing equity-linked structured notes that track the performance of luxury goods retailers such as Hermes, Polo, Burberry, and Coach. Bloomberg reports:

The two-year note is aimed at private banks and asset managers, according to Georg Vonwattenwyl, Vontobel’s Zurich- based head of financial products distribution. The bank will issue as much as 20 million euros ($25 million) of the notes, which start trading July 16 on the SIX Swiss Exchange Ltd. and Germany’s Stuttgart and Frankfurt bourses.

Luxury goods companies in Europe are expected to post sales growth of 7 percent on average this year, after slumping 6.6 percent in 2009, according to a Vontobel report. Fashion companies returned about 50 percent last year, according to the Swiss bank, almost double the 27 percent gain in the MSCI Europe Index of 461 stocks.

Vontobel’s notes will return to investors any gain or loss on the basket of 11 stocks that also includes Bulgari SpA, Burberry Group Plc, Coach Inc., Cie Financiere Richemont SA, Louis Vitton Moet Hennessy SA, Swatch Group AG, Tiffany & Co. and Tod’s SpA.

The Swiss bank issued similar notes in 2004 that earned 20.3 percent for buyers that held them for all of their 18-month term.

I wonder if a similar instrument could be issued to track the profit performance of, for example, Brooks Brothers, Cleverley, J.Crew, J.Press, and Crockett & Jones?

Given the amount of cash we drop on their wares--hell, I am practically a shareholder--these companies should be doing quite nicely.