Here’s an alternative investment strategy that James Bond would love.
Family Classic Cars Ventures recently announced the launch of its Family Classic Cars Fund I, with plans to raise up to $120 million for investments in (you guessed it) classic cars. According to the southern California-based fund, it intends to begin an “aggressive campaign to acquire investment grade classic cars starting in the fourth quarter of 2012.”
In a further twist, the fund is “driving toward the retirement plan market,” according to Thomas Carter, CEO of Capital Window, the firm tasked with helping the fund raise capital.
“We were going to take a percentage of their business and market it, but then we saw their idea about the retirement market and we instead helped them package it in a way to appeal to 401(k)s, IRAs and advisors themselves,” Carter said.
The performance history of the classic car space might make it worth a look. Thomas notes that the asset class has outperformed the broader S&P 500 over the past three decades.
“It’s an asset-backed security that everyone can identify with,” he says. “And it’s noncorrelated. People take a look at it and say, ‘Okay, I can put my IRA money into something I understand.’”
“The launch of Family Classic Cars Fund I L.P. is perfectly timed in the marketplace,” Marc Spizzirri, a classic car industry veteran and consultant to Family Classic Cars Ventures, told told AdvisorOne. “Investors now have a way to capitalize on their appreciation and passion for classic cars.”
The Family Classic Cars Fund will buy cars primarily from private collectors and other sources globally, but may also acquire vehicles at public and private auctions. Sadly, while investors will not be provided access to the vehicles for personal use, “they may have the opportunity to view and celebrate their investments at the fund’s display facility or at any of the national events in which the fund participates.”
“In a way it’s like creating the NASDAQ,” Carter says. “You have all these traders, these car guys, who specialize in different sectors of the classic car market. A lot of these types of asset classes have high minimums, but we’re able to fractionalize it and go as low as $10,000 in our minimums.”
The fund is working with Las Vegas-based Summit Trust Co. in bringing the concept to market. Investments may range from Pre-World War II-era cars to muscle cars of the 1970s with individual valuations estimated to be between $10,000 and several million dollars. Both public and private owners may be engaged to create a diversified portfolio of vehicles for the Fund.
When asked about pricing cars in the fund, Spizzirri said that the values are the fund’s estimates and appraisal valuations would likely be higher. Spizzirri added, “Too many variables go into the valuation of the car, such as condition, collectibility, provenance, originality, ownership pedigree, etc.”
“Bottom line,” Carter concludes about the fund, “it’s a great idea with great timing and a great story.”
Here are 15 examples of cool, and expensive, cars that the fund—and maybe James Bond—might have in their collection:
1) 1948 MGTC Roadster: $68,000
2) 1956 Chevrolet Corvette: $90,000
3) 1969 Rolls Royce Phantom VI: $150,000
4) 1954 Jaguar XK 140: $165,000
5) 1949 Rolls Royce Silver Wraith: $165,000
6) 1971 Mercedes 280 SE 3.5 Cabriolet: $175,000
7) 1957 Cadillac Eldorado Brougham: $190,000
8) 1967 Shelby GT-500: $200,000
9) 1960 Bentley Flying Spur: $250,000
10) 1922 Rolls Royce Silver Ghost: $400,000
11) 1931 Packard Dual Windshield Phaeton: $600,000
12) 1952 Ferrari 342 America: $1.1 Million
13) 1955 Mercedes 300SL Gullwing: $1.2 Million
14) 1967 Ferrari 275 GTB 4Cam: $1.3 Million
15) 1964 Ferrari 500 Superfast: $1.6 Million
Check out these other Alternative Investment stories at AdvisorOne: