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Time for a sound investment?

23 June 2009

With little faith in stocks and shares, investors are turning away from paper investments and choosing emotional assets to secure their wealth.

According to Allianz Musical Insurance, there is an increasing trend of investors joining to form syndicates that pool assets in order to buy rare instruments. Syndicates then loan out their "investment" to up-and-coming musicians, in the hope of furthering their musical careers, thus enhancing the value of the instrument in the process.

AMI worked closely with Emotional Assets Management and Research (EAMR), which recently reported that fine musical investment funds are reaching a return of between eight per cent and 12 per cent.  

Bernard Duffy, managing director of EAMR, says, ‘We are seeing more and more high net investors, their advisors and family offices look to musical investments as long-term stores of value, as well as other emotional assets such as vintage jewellery, collectable timepieces, rare coins and stamps.

‘We believe that the worlds of collecting and investing are converging and this phenomenon will attract more and more investors into this space.  This is currently being manifested in the launch of fine and rare musical instrument investment funds, which are likely to lead to continued price escalation of these instruments over the medium to long term.'

Recent sales of rare instruments suggest this is a wise investment. On 3 April 2009, during the latest Fine Musical Instrument auction at Christies, New York, three world record auctions were set as 80.4 per cent was sold by lot and 89.2 per cent by value, a favourable outcome in an economic downturn.

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