What I'd Like for Christmas 2007

I approached Fidelity Investments in Boston, which runs a great range of sector funds, but I was told it has no plans to launch one targeting the luxury goods market. Marks for creativity and style: Zero.

It's more than a shame. Pictet launched the fund 18 months ago, and it's already showing results. The fund is up 30% in euros -- twice as far as the MSCI world "consumer discretionary" index.

"The concept has worked very well in 2006, and we believe it will continue in 2007," Reyl says.

The biggest reason? China. Luxury goods sales are skyrocketing in the newly industrialized country. Hard to believe, but Reyl says China -- including Hong Kong -- already accounts for as much of the world's luxury goods market as either North America or Western Europe. All three have about 16% of the market, she says. A year ago, China was "in single digits."

Japan remains the mother lode of luxury sales. The Japanese account for 40 cents of every dollar spent worldwide on premium-branded products. But Chinese sales are likely to grow at 25% a year for the next five years, Reyl estimates.

"These guys are going crazy," she says. "We are saying that within 10 years, the Chinese will be the leading consumers of the luxury market. You can see it when you talk to luxury companies. They are all figuring out how to grow in China."