The survey is based on a survey of the global super rich, whose favourite passion investment is fine art followed by watches, which have gone up 166%.
Investments of passion have soared and outperformed the FTSE 100 Index over the last 10 years according to Knight Frank’s Wealth Report published on March 6 2013.
Over 10 years to the end of Q3 2012 the Knight Frank Luxury Investment Index, based on the weighted index of 9 classes of assets including fine wine, art, watches, cars and stamps, grew by 175% compared to the FTSE 100 Index which only grew 54% over like period, even taking into account dividends paid.
Compared to all asset classes, gold was the outright winner with a stellar performance of 434% and surprisingly the next best performing asset class was classic cars at a staggering 395%. High-end London property came in at 103.5%.
Rob Turner of Chelsea Cars, based in Wandsworth, remains upbeat about the turbo- charged performance of classic car investments.
“The key to investment is desirability. Think 60s sports cars,” he said.
Interestingly, there is no shortage of finance for classic cars according to Mr Turner. Based on a 20% deposit, rates are 11/12% APR per annum provided all normal criteria are satisfied by customers.
Mr Turner sees investment value in Jaguar E types which retail at £55,000 rather than super high end brands like Ferraris, or Aston Martin DB5’s which now fetch £0.5m.
“I would rather buy ten E Types than one DB5,” he added.
The survey is based on a survey of the global super rich, whose favourite passion investment is fine art followed by watches, which have gone up 166% and 76% respectively over the same period.
But there are rational reasons for passion investments cited in The Wealth Report according to Dr Rachel Pownall, an expert in alternative investments.
“Their performance tends not to fluctuate with that of stocks and bonds and they can hold their value during periods of expected inflation. They therefore offer an alternative form of portfolio diversification across assets and economic cycles,” she said.
That diversification into passion investments still remains low at an average of 4% of the uber wealthy’s overall portfolio of investments, according toThe Wealth Report.
Like free lunches, it is not all plain sailing when it comes to passion investment. The Wealth Report cites illiquidity and unregulated trading with high dealing costs as negative investment factors.
So if you fancy an E type rather than Vodafone shares, refer your partner to The Wealth Report.
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