This page contains a Flash digital edition of a book.
By LUCIA PERCHARD, DIRECTOR,


, ZEDRA - JERSEY


alternative investments:


How Do They Compare?


With interest rates remaining at all time lows, coupled with well documented concerns around the traditional bond markets, the search for return and increased diversification has led many investors to seek out alternative investments to complement their more conventional investment portfolio.


Alternative investments include such vehicles as venture capital, private equity and hedge funds, as well as “real” assets such as precious metals, rare coins, classic cars, wine, real estate and art. Whilst providing increased diversification and the opportunity for enhanced returns, some of these assets can be difficult to value and are generally more illiquid than traditional investments – and so, like all investments, they come with a risk. The different opportunities that exist in this area are extremely diverse and can be equally complex.


missed, recognise that returns are not guaranteed and these are generally illiquid assets to be held for the long term


“Only spend what truly won’t be ”


Regulations sometimes limit the investment into alternative investments to “accredited investors” as a protective measure to ensure that the prospective investor is sophisticated enough from a financial perspective to understand the risks associated with the investment being considered. These restrictions exist as many fund managers rely on private placement registration exemptions that limit their investor base to sophisticated investors. These investments are growing in popularity as institutional investors, including pension and endowment funds, are increasingly allocating money to alternative investments as they come to


Page 60 20/20 The Finance Centre


recognise the long-term benefits of this asset class. Legislation continues to evolve to open up exposure to alternative investments to the retail market in an appropriate way. In the interim, classic cars, wine and real estate continue to be popular investments with the non-accredited investor to sit alongside their more conventional investments.


Classic cars historically saw a steady increase in value that has since cooled off a little as, whilst increasing interest is sought from India, China and the Middle East, there has also been a notable increase in supply to the market. Cars that lack that scarcity prestige or are of average quality are not seeing the price rises historically achieved. Much like a diamond, there are qualities that should be sought when looking to invest in this asset class such as rarity, quality and, above all, the history of the car. Something rare, technically interesting and with some pedigree is much more likely to hold and increase its value. A car once owned by Steve McQueen is more rare and interesting to potential investors in this market than the same car without the provenance. The value gap between a good example and a great one is becoming more pronounced and it is likely that will continue as buyers can afford to be more selective. Whilst there may have been a cooling off, the collector car market remains healthy and is continuing to see enthusiasm from collectors paying well for rare, high-quality cars with that important history.


Red wine has also benefitted from an increased interest from China. This is, in part, due to their fondness for a lucky colour (white is not as popular as it is associated with death and funerals) and the acquired taste. The increasing value of fine wine has seen it become one of the best performing asset classes of the last 20 years. Fine wine investment should be held for a minimum of five years as it has historically been shown to produce


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116