Why the Strad is a sound investment
(Evening Standard, 2 April 2008)
Feeling the financial pinch? Time to get on the fiddle. A Fine Violins investment fund launches in London today, with a prospective 8-12 per cent return a year, which is more than you can expect at present from property, fine wines or pop memorabilia. Interested? Here’s how it works.
The best violins ever made around 300 years ago in the Cremona workshops of the Stradivari, Guarneri and Amati families. Between 1,000 and 2,000 instruments survive in playable condition, their value inflated by scarcity. In 1945 you could have paid 10,000 for a top Strad; today it can make 30 times as much, depending on pedigree and condition.
The 1700 “Penny” Strad, named after a lady who played it in the Royal Philharmonic Orchestra, comes up at a Christie’s auction in New York this Friday for a fairly modest $1.5 million.
The London plan is to put together a hedge fund of 50 Cremona instruments, yielding constant profit from frugal sales. The man behind it is an instrument restorer, Florian Leonard, who plans to turn €25 million of investor pledges into €60 million of commitments by the year’s end.
“It’s a very inefficient market,” he tells me, “and I know where to find undervalued instruments.”
He’s not the only one on the prowl. A Russian oligarch, Maxim Viktorov, flew Pinchas Zukerman to Moscow last week to test-drive his €3.9 million Guarnerius. A syndicate of British businessmen who helped Nigel Kennedy and Stephen Siierlis to their first instruments are also buying in for the next generation.
Leonhard’s aim is to achieve a high return on investment, “with a beautiful angle, in that it benefits musicians to whom we will loan the instruments before we sell them on”.
I’m not so sure about that. The loans will be from eight years to as little as six months, which makes the prospect unappealing to rising stars, who will also resent Leonhard for pushing up prices.
Bear in mind, too, before you empty the pension fund, that fiddle values can fluctuate in the short and medium term. Five years ago, the New Jersey Symphony Orchestra bought 30 Cremona-or-close instruments for $17 million from a collector, Herbert Axelrod, who was later jailed for tax fraud. In financial straits, the orchestra sold the instruments last year for exactly what it paid, plus interest. Not a penny’s profit.
- evening-Standard-2-4-08275 K