It can take money to make money
Hindal Securities recently launched an alternative investment vehicle based on historic Australian currency.
The Hindal Australian Rare Coin and Banknote Fund invests primarily in domestic numismatic pieces issued prior to 1966, when decimal currency was introduced in Australia.
Hindal recognised the great value Australian collectors placed on these items and saw a managed fund structure as the best approach for investment because of the highly specialised knowledge the field requires.
To gain this expertise, it has partnered with numismatic specialist Jaggards and will work closely with a panel of independent valuers, who will conduct quarterly valuations of all pieces.
With a minimum investment sum of $50,000, it is largely catering to institutional and superannuation fund investors, but it has also attracted strong interest from self-managed and do-it-yourself superannuation fund investors.
“For a lot of people, it’s all too hard to understand how to go about picking an item and what they should pay. There is a lot of investor reliance on the dealers and agents in the market giving you a good return,” Hindal analyst Julian Reznik said.
He said the asset class’ performance compares very favourably to other asset classes, including international and Australian equities, global property, cash and fixed income investments.
According to Hindal’s research, the asset class returned around 15 per cent over 10 years and around 22 per cent over the five and three-year periods.
“What it shows is it’s actually one of the best performing over 10 years,” Reznik said.
With a focus on capital returns rather than income in the form of regular distributions, investors will be able to realise gains after five years in the fund.
According to Reznik: “Our philosophy is to put together a portfolio of coins and banknotes that we’ll hold for the longer term, we will however look to trade if there’s a right time in the market”.
Fifty per cent of the management and performance fees will be split with Jaggards, which will be responsible for the buying and selling of assets within the fund.
The fee structure incorporates a 1.8 per cent ongoing management fee and a performance fee of 20 per cent for returns above a 12 per cent highwater mark.
While performance fees for alternative assets normally apply to returns above 10 per cent per annum, Reznik explained that Hindal raised this to 12 because it was extremely confident of consistently beating this figure.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
