Investment in non-traditional assets such as rare coins, stamps & fine wines could fetch you a fortune in the next 10 years. Make sure you begin to treasure them now
THE revival of animal spirits in the market also brings with it a new set of investment ideas that hold hopes of turning lead into gold, and in some cases it may happen too in the wonder world of investments.
While it was investment in art that reared its head in India as a new theme during the last investment boom that ended in 2008, the current one has the potential to make millionaires out of men in numismatics, philatley and rare wine collection, if advisors turn out to be prophetic.
Men like Hrishi Modi and Harsh Dalal who have been collecting coins and stamps as a hobby may in a few years find themselves that a passion for admiring things that are rare and old, can not only give joy in abundance, but also a fortune.
Rare coins, stamps and fine wines, which are treated as an asset by some billionaires in the West, may soon have advisors peddling them to the wealthy in India, the only country in Asia-Pacific where average wealth grew in 2008, according to a Merrill Lynch-Capgemini wealth management survey. India, where shares have more than doubled from their lows last year, is estimated to have more than 50 billionaires.
The next decade could very well see the rise of these tangible assets here. Once foreign grading agencies and dealers begin operations in India, the market could grow.
In India, as of now, the market for these assets is unorganised. Mumbai-based Todywalla is recognised as one of the very few auction houses which deals in coins and banknotes. "They deal only in high-end coins. They have a catalogue beyond which they don't fish," says Modi.
India with its history of thousands of years of human existence and many civilisations, has the potential to be a great source of rare items which could be found under the farm fields of Bihar or the sand dunes of Rajasthan, once ruled by glorious kings. But there is an issue of authentication of those so called rare items. Normally, their supply cannot increase, but when a market emerges, there are chances of fake ones flooding the market. That's where the importance of grading agencies such as Professional Coin Grading Service and Stanley Gibbons emerge.
If one sees the evolution of art here, it was institutionalised. Similar things need to occur here. India with its documented history of over 1,200 years has the potential to generate staggering money in this area.
Dalal, who started amassing rare coins as a hobby, today has a set, many of which belong to the pre-independence era. Many may become millionaires, at least in paper wealth, by accident, than because of a strategy. "My father used to bring me coins and stamps from his foreign trips. His objective has been that I remember him for these," says Modi, who alongwith his father, Durgadas Modi is keen to take this legacy forward. Modi's treasure consists of Kushan Dynasty gold coin, Calcutta silver dollar, Iran Persia stamps of 1897 and Nazi era coins, which will be 100 years old in next 15-20 years.
Sometimes, we are approached by our clients on the prospects of this asset class. Their eagerness is a sign of things to come here. But investing in stamps and coins may be easy, but knowing their value and monetising them may be difficult.
The absence of a regulator could also complicate matters as investor grievances could remain unsolved for years. There is a big question mark on how their values are arrived at. Since there are not many experts available in these areas, they are often subject to widespread counterfeiting.
But some global experts are on the Indian shores. Stanley Gibbons, the more than 150-year old UK-based stamp and rare items dealer is expanding in Asia, including India.
The global stamp market is at $10 billion a year, says the London-listed Gibbons. It has an index dedicated to stamps — SG100 Index which is updated monthly. Their Guaranteed Minimum Return Contract (GMRC) offers investors at least 15% returns over the five year period or 50% over 10 years and the upside is unlimited in case the market advances well.
Premier Cru, a UK-based wine investment fund, is looking for a partner in India. We are looking to expand into India as part of our global expansion project for 2010/11 and is one of the main territories under investigation at the moment we have spent some time researching this area and we are actively looking for new partners in India
If these assets gain currency, there could be a lot of beneficiaries who otherwise would never have realised what their possessions are worth.
If that's the case, I will sell it over. In the last few years, the passion for the hobby has waned. I have, in fact, passed on many stamps to my friend's children so that they can actually treasure them. But these investments are fraught with liquidity risk too. Lack of liquidity also means buyers are hard to locate.
