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.