What is Passion investments?

According to latest review of the World Wealth Report, prepared by the company Merrill Lynch and Capgemini, the owners of millions of states are increasingly showing interest in investment in non-financial assets: yachts, luxury cars, works of art ... The main advantages of such investments are as follows: firstly, the instruments mentioned provide any kind of stability in a period of turbulence in financial markets and function as inflation insurance, and secondly, the possession of these items should theoretically bring investor satisfaction and correlate with his hobbies. Therefore, this class of investments called "investment in their passion» (Passion investments).

Not all analysts agree that invest in their hobby profitable: Alternative assets are difficult to evaluate and classify difficult to include in a traditional investment portfolio ... Another problem is that their yield is often determined fashion (to a greater extent than the value of financial assets). How do I know whether to bring a welcome luxury after a while the big profit ?..

In any case, the popularity of these investments is increasing, and Capgemini, even predicts that by 2011 demand for alternative assets will grow to 8%(in 2009 it amounted to 6%). Main "passion" are two: a work of art and what is called "other collectible items - coins, antiques, expensive wines. In late 2009 - early 2010, the auction houses and other companies specializing in luxury goods, felt a new upsurge in demand for their products and services. According to Artprice.com, at public auction with works of art in the first half of 2010 was generated 3.8 billion dollars - almost as much as for the full year 2009. One of the "barometer" of the art market, the index Mei Moses All Art, rose for the first semester of this year by 13,5%(while the Standard & Poor's 500, which includes shares of the 500 largest U.S. companies took off 6,5%). Index of Liv-ex Fine Wine Investables, showing the level of prices for expensive wines, the first eight months of this year rose by 27,2%, the number bought in the first quarter of boats has increased compared to the same period last year by 30%, and their cost - 70%.

Some organizations only welcome the decision of its clients to invest in alternative assets. In the example could be a private Swiss bank Lombard Odier, developed a system of money management that integrates financial and non-financial assets in an electronic portfolio. Customers may at any time to access and monitor the behavior of all assets. According to head the operational management of the bank Marcus Koch (Markus Koch), with the help of the system can "analyze their assets and liabilities and to understand whether you want to diversify their investments." Knowledge of current asset prices might help in estimating the fair value of loans secured by, for example, a private yacht.

Some firms have opened funds that invest in "passion" for customers who do not have the time or desire do it yourself. One of these funds - Fine Art Fund, managed by former curator Philip Hoffman (Philip Hoffman). In the past six years the total annual income from the assets sold to average 34%. Hoffman believes that art should be 1-5%of the portfolio investor.

believe fans of Passion investments, crucial plays the difference between the expensive items of mass production (such as boats and planes) and unique things. When buying a boat you can expect to save up to 30%, but the painting of Picasso is not held. By the way, according to company Fractional Life, cars and yachts for the first year of ownership they lose in price by about 15%, in addition to their maintenance spend about 10%of the cost.

However, the risk is present in all market segments. Thus, the record prices for paintings by Picasso of the same prompt many to invest in a painting, but not the fact that they buy works of artists required to contribute revenue. "Investing in drag - is, in fact, the game: you try to guess what will be popular in the future", - the expert said the investment company Saltus Partners, Dan Kemp (Dan Kemp).

Material prepared Onuchina Maria and Julia Maksimova, AI

Sources: online.wsj.com , artinvestment.ru