Old violins and other hedge funds

Bob Moon May 24, 2007

TEXT OF INTERVIEWBOB MOON: Maybe the next time the market’s up, we can have a Stradivarius play “We’re in the Money.” That would be appropriate, considering the latest idea in hedge fund investing: collecting fine violins. It’s the subject of a story in today’s Financial Times. FT reporter James Mackintosh tells us this “violin hedge fund” is one way for investors to go beyond stocks and bonds and it’s the latest in a series of odd hedge fund ideas.

JAMES MACKINTOSH: Yeah there have been some very strange, there in fact are some very strange funds out there: wine, art, last year someone tried to get a stamp hedge fund off the ground which didn’t work.

MOON: Maybe I’m missing something here but how do they expect to get big returns out of these things.

MACKINTOSH: Well the strategies vary depending on exactly what they’re investing in. I mean old violins obviously aren’t being made anymore. There are an increasing number of wealthy people who collect them and the laws of supply and demand have pushed up prices.

MOON: What do you think the chance is that this hedge fund could lock up all kinds of rare violins, take them out of circulation?

MACKINTOSH: Well the way they’re structuring it actually, it won’t take them out of circulation. The violins bought by the fund will be lent out to budding musicians, which has advantages for the investors in the sense that the musicians have to pay the insurance and obviously then the investors don’t have to pay to put them into storage. Plus of course anyone investing I guess could feel good about the fact that they’re helping musicians

MOON: OK thank you very much, appreciate you joining us.

MACKINTOSH: Thanks very much, bye.

MOON: James Mackintosh is a reporter for the Financial Times.

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