COVER STORY Passions
It is often the most exciting and glamorous areas of the market that experience this boom and bust cycle , starting with a glut of high-profile fund launches , which eventually disappear when the earnings struggle to match the hype . For example , just five of 50 internet-related funds launched between 1999 and 2002 have survived , according to research from Morningstar .
Dark horses But just occasionally , this works the other way as well . Many professional investors steer clear of industries that appear overly dependent on human emotions , with football a good example – many clubs that have overspent on transfer fees and players ’ wages in a bid for glory have ended up going into administration . Yet this means the clubs whose finances are tightly controlled can go unnoticed by the market , leaving them on attractive valuations even though they operate in a growth industry . Luis García Álvarez manages the MAPFRE AM Behavioral fund , which allocates 25 % to sport including European football teams . He warns that mainstream investment practices ,
The finer things
Equities aren ’ t the only way to access sectors that you are passionate about – physical assets such as art or fine wine represent another option . But like other real assets such as property , these tend to be long-term , illiquid investments .
Steven Sulley , founder and art advisor at Woodbury House , says the need to research carefully is vital : “ Some people fall into the trap of rushing into investing because they love a certain piece , or there is a sudden increase in a specific artist ’ s popularity . Always consider your purchase carefully and ensure you have done all the necessary research . You must be prepared to hold on to your purchase for as long as it takes to get it to the price it deserves . As a rule , you should plan to keep your art for at least 10 to 15 years .”
Yet even after holding an artwork for such a period of time – and ignoring costs such as insurance and storage – there is no guarantee it will appreciate in value . Unless you are an international expert , it may be best to use such assets for pleasure rather than business and look upon any appreciation in value as a bonus .
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