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Strategies & Market Trends : Aardvark Adventures -- Ignore unavailable to you. Want to Upgrade?

To: Bucky Katt who wrote (5754)	10/25/2008 1:13:55 AM
From: ~digs	Respond to of 7944

Rare stamp funds up as much as 38% this year financialpost.com If you've watched your portfolio shrink to the size of a postage stamp in the past few months, perhaps it's time to invest in the real thing. Philately -- the schoolboy hobby of collecting rare stamps -- has become a legitimate alternative investing tool in recent years, offering more than decent returns and a performance that has little correlation to traditional investments. "We've had investment bankers taking out £100,000 ($200,000) portfolios for the past two years," says Geoff Anandappa, investment portfolio manager at Stanley Gibbons Ltd. ( www.stanleygibbons.com),the venerable Londonbased dealer that has been trading rare stamps from a little shop on The Strand for more than a century and a half. Though 95% of Stanley Gibbons' activity still revolves around the enthusiasts that buy and sell stamps for their collections, the company is one of a number of similar dealers now offering investment funds that track the performance of a collection of rare stamps. It's not hard to see why their product is attractive. This year, while everything from gold to property to equities has fallen off the charts, some of Stanley Gibbons' funds have turned in returns of as high as 38%. The Stanley Gibbons GB Rarities Index of rare British stamps is up almost 150% in the past 11 years. Although not every portfolio does as well as that, Stanley Gibbons guarantees investors a minimum return -- of at least 5% per annum over a five-year period, with a better offer depending on the duration of the investment. The stamp dealer caps the amount of funds maturing in any particular year, which should help safeguard its guarantees. The company can also take care of investors' storage and insurance needs. Leaving aside the underlying assets, a rare stamp fund is structured much like any other investment. The minimum commitment is about $20,000 and the average portfolio is about $50,000. Typically the investor gets a portfolio that includes some "blue chip" stamps expected to generate stable returns, like "penny blacks" that have a long-term proven track record of steadily increasing value. The portfolio might also include other stamps for which the future value is less predictable -- rare fakes, modern stamps with colours missing or other errors, and stamps from developing nations. In other words, the funds include both blue-chip and emerging-market plays. In all, there are 50 million stamp collectors around the world and turnover from rare stamp trading is well into the tens of billions of dollars, according to Stanley Gibbons' estimates. The firm claims it has about $50-million under management, a rapid growth from less than a fifth of that just four years ago. Much of the demand for rare stamps is currently driven from Britain -- the Royal Philatelic Collection is perhaps the world's most extensive, running to several hundred million dollars worth of stamps -- and the old Commonwealth countries, like India, Australia and Canada. There's also a long-established stamp market in the United States where bond king Bill Gross of investment manager Pimco is a celebrated collector. Last year, Mr. Gross raised US$9.1-million for charity by selling stamps he had bought less than 10 years earlier for US$2.5-million, prompting the declaration: "It's four times profit. It's better than the stock market." There's also growing interest from China -- about 20% of the hits on Stanley Gibbons' Web site are from China -- as well as the Middle East, South East Asia and Latin America and Russia. The difference between collectors and investors can be summed up quite easily, says Mr. Anandappa. While a stamp collector just wants to fill the gaps in his portfolio, the investors are more selective and only want stamps that will increase in value.