Rare coin investment funds have been around for decades, and on
Oct. 31, the formation of four new funds to be managed by Certified
Assets Management International LLC, was announced. One of the funds
is expected to acquire up to $250 million in rare coins.
For many, what first comes to mind regarding “coin funds” are two
rare coin funds in which the Ohio Bureau of Workers’ Compensation
invested a total of $50 million between 1998 and 2005.
Although the funds returned more than $10 million in profit to the
state, their success was tainted when Ohio coin dealer Thomas W. Noe
was found guilty of various charges including theft and money
laundering related to his management of the two funds.
The concept of collectible objects forming the basis of an
investment fund is not new. In the past decade several fine art funds
have emerged. Philip Hoffman, CEO of The Fine Art Fund Group LTD,
summarized the appeal of art-based funds, stating, “The value of a
[painting by] Canaletto will never go down to zero, it will never do
an Enron or a Marconi.”
The Fine Art Fund Group fund has created relationships with
several major banks including the Emirates National Bank of Dubai.
Gary Dugan, chief investment officer of the bank, has stated: “We’re
not doing interior decoration. It’s not an aesthetic investment but a
Investors are increasingly turning to alternative asset classes
like fine art and rare coins as stores of wealth, although the case
for paintings as an investment differs somewhat from coins, in that
thousands of art museums around the world acquire and serve as
permanent depositories of art, creating an ever-shrinking supply of
Old Master through Modern paintings.
Rare coins generally enjoy greater liquidity than fine paintings
and the possible infusion of $250 million in the rare coin market
could help the market reach new levels.
As some paintings can trade for up to $150 million privately, many
have wondered whether the presence of institutional investors is
needed for individual rare coins to break the $10 million barrier.
Whether CAMI will be able to attract investors to the funds is yet
to be determined, as is the impact that an additional major buyer will
have on the coin market. If the funds are done right, it could add
legitimacy to rare coins as an alternative asset class worthy of
high-end investor dollars. ■