Vintage Violins’ 8% Gain Fuels Returns for Ex-Banker’s Clients

(Bloomberg) -- A former Frankfurt banker is carving out a niche in the small but potentially lucrative world of investing in vintage string instruments.

Vintage Violins’ 8% Gain Fuels Returns for Ex-Banker’s Clients

Christian Reister, chief executive officer of Violin Assets GmbH, says an instrument made by a master craftsman such as Antonio Stradivari can appreciate by as much as 8 percent a year. His firm has sold several dozen musical instruments to private investors, endowments and family offices since it was set up in 2014 and he now wants to start a fund focused on the alternative asset class.

“A Stradivarius can contribute to the diversification of a portfolio due to the low correlation with other asset classes,” Reister said in an interview.

Low interest rates and uncertain prospects for equity markets make alternative assets such as musical instruments, classic cars and works of art more appealing to investors. Reister and his business partner, Jost Thoene, generate income by either finding instruments themselves and then trying to sell them at a profit, or purchasing them on behalf of clients in return for a fee.

Lack of Transparency

The market for sought-after violins and other string instruments is still much smaller than that for, say, vintage cars, and lacks transparency. Prices start at about 35,000 euros ($40,000) per instrument, but a particularly rare violin, viola or cello can cost as much 30 million euros, according to Reister.

Vintage Violins’ 8% Gain Fuels Returns for Ex-Banker’s Clients

He and Thoene are currently preparing to launch their first fund. “We are talking to seed investors,” Reister said, adding that they’re looking at a possible start date in the first quarter.

Reister worked in asset management at Frankfurt-based B. Metzler Seel. Sohn & Co. for five years before moving into alternative investments. As he points out, the string-instrument market can be challenging. Valuable vintage instruments are expensive to insure and maintain, and the market suffers from a lack of liquidity.

While they may be a good way of diversifying of a portfolio, musical instruments rarely produce quick returns, said Ioan Gramatic, a concert violinist based in Switzerland who also sells instruments. "A sale can take months -- if not years -- if the best possible price is to be achieved," he said. The investment period should not be less than seven to ten years, he added.

Like vintage cars, classical instruments are often still in use. “Many of our clients are involved as art patrons," Reister said. "They sometimes make their violins, violas or cellos available to certain exceptionally talented musicians on the basis of a long-term lending agreement.”

Original Story:
Ex-Metzler-Banker verspricht klangvolle Renditen mit Stradivaris

Reporter on the original story: Stephan Kahl in Frankfurt at skahl@bloomberg.net

Editors responsible for the original story: Erhard Krasny at ekrasny@bloomberg.net;Andrew Blackman at ablackman@bloomberg.net

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