Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset class that boasts little correlation to volatile equity markets: Collectible cars.

Rolling Art Advisors is current in the market to raise a fund of $25-$50 million to acquire a portfolio of 8-12 limited production collectible sports cars which the firm contends will equate to automotive treasure. The fund is designed for a ten-year term, with minimum investments beginning at $250,000. It has been marketing since at least last October.

Exposure to this market has proven difficult for many investors in the past, due to high ownership costs and capital outlays required to obtain a portfolio of high-end collectible cars, according to a press release. A general lack of domain expertise most likely didn’t help, either – not every investor knows a Bugatti from a Ferrari. 

Collectible cars as an asset class, however, have long been favored for its lack of correlation with other markets, particularly equities. "The collectible car market moves in negative or near negative correlation to equity markets,” noted Rolling Art’s Joshua Wekstein, who is named in the press release as a manager of the fund. “In this environment, who wouldn't want to reduce their portfolio's correlation to the volatility of the stock market?" 

Rolling Art co-founder and fund manager Marc Sharinn explained that some high-end collectible sports cars can sell for $5-$10 million dollars apiece, with a rare McLaren F1 selling at auction recently for over $13 million. "These cars come at a tremendous expense, making direct investments in the space nearly impossible for most. Our fund solves that problem", says Sharinn.

Generally, collectible car investors focus on vehicles that can be reasonably expected to hold or increase in value due to a few desirable characteristics, such as being limited in number (this is the biggie), having historical significance, or being highly innovative in terms of engineering or design. 

Like with regular art, however, liquidity is thin, meaning skyrocketing values when times are good and new access to cheap credit brings a flood of newly-rich, yet wholly uninformed, buyers. The prices of many high-end collector cars have risen sharply in the recent years, with the average value of German post-war cars nearly tripling since 2010, according to collectible car experts Hagerty. Between 1980 and 2011, classic cars in general have returned 12% compounded annually, according to Rolling Art.

Of course, such markets can overheat quickly, and the lack of liquidity can hurt as well as help. But this world is heavily dominated by the global 1%, which is generally better insulated against the ups and downs of economic cycles than your average investor. In such moments, the best thing to do with your average 1950’s Mercedes gull-wing is to just wait.

Wantagh, NY-based Rolling Art LLC was formed in June of 2013 to establish proof of investment principle by acquiring several limited production high-end classic sports cars. No additional details about the fund were immediately available.

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