The violin that was played by the Titanic’s bandleader has recently been sold at auction for a price of £900,000. Of all the objects associated with the ship’s doomed maiden voyage, this is certainly one of the most significant and its market value is a reflection of this.
The sale provides an example of how some high net worth individuals are increasingly being drawn towards alternative investments.
The desire to make a profit is undoubtedly a factor in such an investment decision.
READ MORE: {}
Of equal importance though is the investor’s wish to tie up some of their wealth in a tangible asset or area of interest.
According to the returns from Knight Frank’s 海角视频 Investment Index, some alternative investments have been strong performers over the past decade.
The statistics which have recently been published show that antique watches have provided returns of 83 per cent over the past ten years, whilst wine has yielded 182 per cent. In contrast the FTSE 100 has returned 55 per cent over the same period. It is therefore unsurprising that certain investors are being attracted by the higher potential returns available elsewhere.
Individuals considering investing in this area should be prepared to tie up their capital on a long term basis. The returns over ten years for wine are excellent.
However, if an investor were to sell their holding after twelve months, their level of return would have been in the region of just three per cent. This pattern is similar for watches with a 4 per cent return in the first year.
Most Read
Investing in an area of interest can be a source of enjoyment for certain individuals who relish the chance to use their knowledge in pursuit of a profit. However, all alternative investors should take the time to thoroughly research the item in question prior to committing capital.
Reputable auctioneers will take steps to ensure the authenticity and provenance of an item. Even so employing the services of a specialist should be considered as it can reduce the likelihood of investing in a counterfeit piece.
The violin that belonged to the Titanic’s band leader Wallace Hartley was subject to a seven-year authentication process. In assessing whether the instrument was genuine, the findings of forensic scientists as well as diary entries from Hartley’s fiancée were taken into consideration.
Listed with a guide price of £300,000 the violin actually sold for a sum in excess of
£1 million once all taxes and fees are taken into account. The identity of the buyer is unknown but believed to be British.
As with many musical instruments sold at auction, the violin is in excellent condition and was briefly displayed to the public prior to its sale. However, salt water corrosion has taken its toll on the instrument rendering it unplayable and in this respect it differs from similar investment pieces.
Many of the individuals who have the financial resources required to purchase an item such as a Stradivarius violin, are themselves unable to play them.
They will therefore loan the instrument to promising young musicians able to play in a manner befitting to such a valuable piece. Under such an arrangement the musicians will usually be expected to cover the insurance and maintenance costs of the instrument.
Don’t miss
The level of demand for such collectibles has seen an upsurge in the wake of the financial crisis. On a purely practical level such investments can provide valuable diversification benefits for a portfolio. Their low level of correlation to conventional investments such as stocks and bonds is particularly beneficial in this regard.
The alternative investment market is broad and can cater for a wide range of interests. Other options include stamps, coins, vintage fashion and wine. Prices for the latter have risen significantly over the past two years largely driven by demand from Asia’s growing economies.
Regardless of the asset in which you choose to invest, there are some common rules to be aware of. Primarily any investment decision should be the culmination of thorough research.
In addition alternative investments are not suitable for those looking to make a quick profit, and so preparedness to tie up capital on a long term basis is also a necessity.
* Trevor Law is a director with Merito Financial Services, chartered financial planners, based in Solihull.
* E-mail: tilaw@meritofs.com