Stamford Management Group, a Singapore-based family office that oversees about $300 million, is seeking $100 million from investors as it opens up funds that buy French Bordeaux wines and jade antiques.
Stamford, which looks after the wealth of three families including that of Chairman William Chan, plans to raise $50 million for a fund that invests in wines and the same amount for a fund that buys Asian antiques, said Chan. Stamford is in talks with local and foreign private banks to raise money from high-net-worth individuals and other family offices, he said.
The manager is betting rising affluence in the world’s fastest growing region will drive demand for luxury items. Asia’s 3.3 million high-net-worth individuals had $10.8 trillion in assets, outnumbering those in Europe for the first time, according to the 2011 World Wealth Report by Capgemini and Bank of America Corp.’s Merrill Lynch Global Wealth Management unit.
“The larger family money is increasingly looking to professionalize and is looking at Asia,” said Chan in an interview in Singapore yesterday. Dealing with tangible assets makes it “easier to connect more on an emotive level than say stocks or bonds, which are non-physical and which you would just keep with the bank,” he said.
The Cornerstone Grand Cru Investment Fund buys only wines with a lifespan of 30 years to more than 100 years mainly from Bordeaux and some from Italy and Spain, Chan said. Principals, including Stamford Asset, have invested about $5 million in the fund, which returned about 28 percent from May 2010 through July 2011, according to Chan.
The fund bought futures contracts on Latour 2008 En Primeur, a French Bordeaux wine, at about 150 euro ($191) a bottle in the middle of 2009, Chan said. The price rose to about 800 euro and the fund took profit by selling the futures at 700 euro, he said.
Stamford has teamed up with Singapore-based wine distributor Hock Tong Bee (S) Pte, which has a wholesale distribution channel in Asia, to ensure the liquidity of the fund by giving it access to customers, Chan said.
“As lifestyle improves in Asia, the potential take up rate and growth for wines will be very large,” Chan said.
The value of the Liv-ex 100 Index of Fine Wines, the industry benchmark, has almost tripled in the past decade.
The Asian Art and Antique Fund buys artefacts including jade, royal porcelain and Chinese calligraphy at public auctions such as those run by Christie’s International Plc, Chan said. The fund will only hold on to the investments for about six months to 18 months before selling at auctions and to institutional buyers, Chan said. The fund targets annual returns of 20 percent, he said.
The transaction amount of the Chinese auction market has expanded to 93.4 billion yuan ($14.8 billion) in 2011 from 125 million yuan in 2000, according to data compiled by Artron Group, which provides services to Chinese art collectors.
Demand for art is increasing as high-net-worth individuals look at the asset class as part of their succession planning, Chan said. Efforts by the Chinese government to buy back art works from its citizens as part of the nation’s cultural preservation policy is sustaining prices, he said.
Last year, China overtook the U.S. to become the world’s largest art and antiques market, said a report published by the Netherlands-based European Fine Art Foundation in March. Auctions in mainland China, Hong Kong, Macau and Taiwan raised 9.8 billion euros in 2011, according to the report.
“What has been produced in the Qing Dynasty will never be replicated,” Chan said. “We think that with more funding, we can get into the market more efficiently.”