Passion & Money: Your Best Investment 2014 Fits on Your Wrist
Coutts Index reveals passion investments have risen 77% since 2005, outperforming shares
Classic cars rise 257%
Classic watches up 176%
Billionaire property doubles in value
Passion investments returned 77% (local currency terms)* since 2005, outperforming shares, according to the first edition of The Coutts Index: Objects of Desire. Launched today, the new Coutts Index aims to provide the global benchmark for monitoring the performance of passion assets.
The Index, developed in conjunction with Fathom Consulting, captures the price return in local currency (net of the holding costs) of 15 passion assets across two broad categories: trophy property and alternative investments. Alternative investments can be further broken down into fine art, collectibles and precious items.
Of all the alternative investments Coutts examined for the Index, classic cars have returned the most since 2005, rising by 257%, outpacing all other investments by more than 80 percentage points over the seven and-a-half-year timeframe. Classic watches have also proved they can stand the test of time, rising by 176% from 2005 to 30 June 2013.
Jewels returned 146% in comparison, while the standout performer in the fine art space is the traditional Chinese works of arts sector, which rose by 163% between 2005 and 30 June 2013.
Over the past seven and a half years, the Coutts Index, based in US$ terms, has risen by 82% – over the same period, the MSCI All Country Equity Index has risen by 53%, based in US$ terms.
The Coutts Index incorporates a real estate component supplied by Savills World Research. Trophy property comprises ‘billionaire’ residential properties in the ten prime global city locations and ‘leisure’ properties in the world’s most desirable leisure destinations associated with these cities. Both measures lost value in the run-up to the global recession, but billionaire property values have risen strongly since, rising 100% from 2005 to 30 June 2013.
Mohammad Kamal Syed , Head of Strategic Solutions at Coutts, said: “The Coutts Index has been created to measure passion assets, or objects or desire, in terms of performance, cost of storage and currency. But while many alternatives have provided spectacular returns, there is more to investing in these assets than price appreciation. For many people, profit is furthest from their mind.”
He added that for many ultra-high-net-worth individuals, it is less about investing and more about purchasing – purchasing assets driven by their emotions.
“The benefit is more than just profit. Owners can bond with like-minded people in an elite network, with assets offering escapism and a chance to re-enact history. Indeed, there is one thing that the Coutts Index, for all its robustness, can’t measure – and that is happiness. The idea of someone paying $50m for an uncomfortable old car, with windows that don’t work and a noisy engine, seems illogical. In many ways it is. But the happiness such a car can bring is immeasurable.”
Coutts commissioned articles and interviewed experts for its first edition of the Coutts Index. They included Stanley Gibbons, the world’s leading stamp dealer, Berry Bros. & Rudd, the wine merchant and auction houses Sotheby’s and Christie’s.
Quentin Willson, broadcaster and classic car specialist, looked under the bonnet of the classic car market. He wrote: “If you had bought a 1970s Ferrari Daytona for £50,000 in 2003, it would be worth £250,000 today. A 1960s Aston Martin DB5 bought for £60,000 a decade ago would now command £350,000.”
“The question is whether the classic car market has peaked. I’ve been wondering whether the bubble will burst ever since prices started to rise in 2009. But they have kept on rising and were up 27% in the first half of 2013.”
Nick Foulkes, author, historian and watch enthusiast, revealed why he has been fascinated with watches since he was a child. He wrote: “I can still remember writing an article in the 1980s, saying that the price of an old ‘Paul Newman’ Rolex Daytona was about to overtake the price of a new one. Now you will be lucky to find one for under £70,000.”
“But not all watches will burn a hole in your pocket. Rolex recently launched some particularly attractive Day-Date models with brightly coloured dials. These recalled the original ‘Stella’ dialled Rolexes and are now creeping up in value, but these Day-Date models can still be purchased for four figures. And I still think that vintage Cartier watches are hugely undervalued.”
Coutts is the wealth division of Royal Bank of Scotland Group. Coutts serves clients from over 40 offices across the world offering tailored wealth management, banking, trust and tax services. Coutts is headquartered at 440 Strand, London with offices in other key international financial centres in Zurich, Geneva, Hong Kong, Singapore and Dubai. The division includes Adam & Company providing private banking services from Edinburgh, and RBS International, based in the Channel Islands, which provides offshore banking.For further information please visit www.coutts.com
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Smart fashion is now a wise investment. – The hedge fund on your wrist.
Investment-quality timepieces gain popularity amid market turmoil.
The world’s economies and stock markets have come to resemble the house of horrors and roller coaster, but there is nothing amusing about the summer of 2011 for investors. Bonds yields are at record lows even after Standard and Poor’s historic downgrade of the USA’s credit rating. Precious metals have risen steeply and then nosedived. Demand for gemstones and ethical issues are causing doubt. All of this leaves you with few vehicles to protect the assets.
One shining ray of light in the darkness is the fine watch market. Unlike art and antiques, which require more expertise and carry more risk due to the volatile nature of the market, high-quality genuine watches are attracting investors interested in stability and an investment they can understand. Even those strapped for cash are benefitting from selling what was once strapped to their wrist.
Fashion is less of an issue with a timepiece because more people wear great watches than collect great art, and a beautiful timepiece is more likely than painting or sculpture to be regarded highly by future generations and become an heirloom. Experts in horology are relatively easy to find, and their value assessments are likely to be an accurate reflection of the real market value for a given timepiece.
Many news sources, finance pundits, and investment advisors are reporting that alternative investments are gaining in popularity, but investors find few categories they can trust in troubled times. Add the advantage of being able to wear an elegant timepiece that has an actual function and owning an investment-value timepiece becomes a very attractive notion.
Worldwide increased demand has made the stock prices of manufacturers and retailers high enough to be reported by numerous sources. The following articles mention the record high prices of auctioned art, antiques, and jewelry (including luxury watches), the rising stock prices of watchmakers and dealers, and the sale of watches by some who have been hit hard by the global recession:
AOL Daily Finance’s The Motley Fool – Is Fossil the Perfect Stock? – http://www.dailyfinance.com/2011/08/11/is-fossil-the-perfect-stock/
Bloomberg – Swatch First-Half Profit Rises 24%; Increases Hengdeli Stake – http://www.bloomberg.com/news/2011-07-28/swatch-first-half-profit-rises-24-increases-hengdeli-stake-3-.html
Bloomberg – Packard’s Vacheron Constantin Watch Triples to $1.8 Million at Christie’s – http://www.bloomberg.com/news/2011-06-15/packard-s-vacheron-constantin-watch-triples-to-1-8-million-at-christie-s.html
Bloomberg – Christie’s $5.8 Million Singing-Bird Pistols Lift Watch Sale – http://www.bloomberg.com/news/2011-05-31/christie-s-5-8-million-singing-bird-pistols-lift-hong-kong-sale-to-record.html
Boston Irish Reporter – Hangzhou store sales data: luxury half a year of links of London gold jewellery or surprising – http://www.bostonirish.com/node/15280
Chicago Sun-Times – Lou Gehrig items bring nearly $1M at Rosemont auction – http://www.suntimes.com/news/metro/6880321-417/lou-gehrig-items-bring-nearly-1m-at-rosemont-auction.htm
CNN Money – Pawning Rolexes to make payroll – http://money.cnn.com/2011/08/02/smallbusiness/small_business_loans_pawn_shop/index.htm
Yahoo! News – The Collections of Movie Icon Tony Curtis Are to be Offered at Julien’s Auctions in Beverly Hills – http://news.yahoo.com/collections-movie-icon-tony-curtis-offered-juliens-auctions-070858914.html
Cover image courtesy of Alon Ben Joseph
I’ve noticed recently, whilst shopping with a client for a Valentine’s gift, fine metal-link bracelets and more streamlined case watches in a selection of shops – very much a revival of the early ’70s/’80s style. I am pleased to say that many of the luxury watch brands and jewellers have embraced this revival, for there’s no competition with classic timelessness in whatever you buy.
I have always liked the elegance and slight dressiness of this style of watch, both on men as well as women, as it gives the wrist a softer look. Back then my father bought one of these for both himself and for my mother: matching his-and-hers Piaget gold watches. He had them inscribed with the words ‘for ever in time….’; I thought then how romantic that was. Who said that romance is dead?
It’s nice to see elegance making a comeback from the more cumbersome watches that are so readily available now. How comforting with fashion that what was popular in bygone years will come back around again, as with everything! In my case I’ve found the bulkier watches a bit of a hindrance when dressing clients, as in many cases the cuff ends up sitting on top of the watch instead of skimming or sitting over the watch. I find the more sportier designs work well in a more casual environment, worn with polo shirts or sweaters at the weekend.
Here are some examples of what’s out there for Valentines gift ideas for your loved ones. Patek Philippe has very beautifully-designed Calatrava men’s and women’s 18ct white gold or yellow gold watches with mechanical manually-wound movement – perfect ‘his-and-hers’ gifts.
Patek Philippe – Calatrava (yellow gold)
Cartier has the iconic Santos de Cartier with a good selection of metal finishes and sizes to chose from; my eye is drawn to the gold and steel link bracelet, with screw design on the bezel of the watch.
Cartier – Santos de Cartier
And Audemars Piguet has the Royal Oak, for him and her, self-winding with 32 diamonds set in to the bezel.
Audemars Piguet – Royal Oak
Just a reminder: think carefully before investing in rose gold as a metal colour; you’ll find it more difficult to coordinate with other accessories and it is very limiting. On a positive note it can look great in certain watch-face styles, such as the Baume et Mercier Hampton, the Jaeger-LeCoultre Reverso, and the Cartier Tank Americaine; all three have an art deco feel and look to them, finished off with a chocolate brown leather or crocodile strap. The latter works better as it looks great with age. Also note that some of the women’s collections are semi- and fully-encrusted with diamonds.
Jaeger-LeCoultre – Reverso Grande Taille
Baume et Mercier – Hampton
This is just a small taster of what is available, and all the watches mentioned have other related accessories for all those other occasions, just to make shopping that little bit easier.