INVESTMENT STRATEGY
SPECIALIST
R
SECT ILE
PR F
CAVEAT EMPTOR
Anyone who manages client
money for a living is often less
bullish about the qualities of
these assets as investments.
Robert Blower, a partner at
Charles Russell Speechlys, warns
the art market is less regulated
than other investment sectors,
though using reputable art
houses offers some protection.
“People can be ripped off
and there is the potential to
lose money to middlemen and
fashions,” said Blower. “Amateurs
must tread carefully.”
Blower says ownership is not
simply a right, but an obstacle.
Passing the title of a work of art is
not as easy as registering property
with the Land Registry.
“Among the first of the
problems is provenance – is it
the product of looting, already
sold, or does it have mortgages
attached to it? Investors need to
deal with reputable people and
take legal advice.”
INVESTMENT, BUT NOT AS
WE KNOW IT
Charles Gowlland, partner at
Smith & Williamson, says these
assets do not satisfy criteria of
what constitutes an investment
asset.
People buying them confuse
emotion with investment and
that may encourage them to do it
for the wrong reasons.
“Equally significant is that
most of these asset classes are not
liquid, or even in liquid markets,”
said Gowlland. “Vintage cars and
art are by their nature unique
items and while it is possible to
create an index, any such measure
is not that meaningful.”
Creating an index is also
problematic for other assets
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CREATING AN INDEX
IS PROBLEMATIC
FOR OTHER ASSETS
SUCH AS COINS,
STAMPS AND LUXURY
WATCHES, WHICH HAVE
HIGHER NUMBERS IN
CIRCULATION
such as coins, stamps and luxury
watches, which have higher
numbers in circulation because
the data is relatively poor and
from a statistical perspective, not
especially robust.
“In basic terms, these are not
really asset classes with pure
investment legitimacy,” warned
Gowlland. He also cautions
against choosing an investment
based upon its tax status – as he
puts it: “Never let the tax tail wag
the investment dog.”
“If you want to invest in the
asset class, one way would be to
invest in ‘picks and shovels’, not
gold miners themselves,” said
Gowlland. “In the case of stamps,
Stanley Gibbons for example,
as it is listed, or Sotheby’s or
another auctioneer which trades
in these goods.”
SPECIALIST FUNDS
PICTET PREMIUM BRANDS
This fund invests a minimum of twothirds of its assets in listed luxury brands
with attractive growth prospects. It has
entry charges of up to 5 per cent, with
exit and conversion charges of up to 1
per cent, although these are maximum
figures and there is no performance fee.
As at the end of 2014, ongoing charges
were 2.02 per cent.
WINE ASSET MANAGERS
FINE WINE FUND
This fund invests in the red wines of
Bordeaux, but also considers wines
from Burgundy, the Rhone Valley,
Champagne, Italy, the US and Australia.
It has delivered 7.5 per cent since
inception in 2006 and is up 2.5 per
cent this year. It requires a minimum
investment of £50,000 and has an AMC
of 2 per cent and performance fee of 15
per cent.
AVARAE
Avarae is the UK’s only publicly traded
specialist investment company dedicated
to investing in rare and high quality
coins. The Isle of Man-based fund
floated in 2006 and at the end of its
last financial year held coins valued in
excess of £10.5m. It invests globally in
a portfolio of coins which it holds for
short-term trading opportunities and for
more than one year to achieve long-term
capital growth.
TRUSTNETMAGAZINE 19