Investments to keep and enjoy

Investments to keep and enjoy
PHOTO: Investments to keep and enjoy

As financial markets continue to be mired in a sea of red, investors may wish to avoid equities until the outlook becomes clearer.

The Sunday Times takes a look at other assets that can offer both some return as well as a degree of pleasure.

Diamonds

Hollywood bombshell Marilyn Monroe sang Diamonds Are A Girl's Best Friend and, indeed, these gems can offer healthy returns.

Prices across the various categories of precious stones, including the 3-carat and 4-carat ones, have surged 30 per cent in the last few years, said Mr Cyril D'Silva, 54, executive chairman of Australia-based gold and mining firm Golden Saint Resources.

This is based on data from diamond and jewellery website PriceScope.

Wealth intelligence firm Wealth-X, which compiles information on ultra-rich people, noted in July that uber-rich investors and gem collectors are still investing heavily in diamonds, which are seen as secure and lucrative assets.

"Rough diamond prices have increased by nearly a third since 2005 and are likely to rise a further 20 per cent between 2013 and 2017, bolstered by demand from China and India," it said in a report. Auction houses such as Sotheby's are still going ahead with diamond sales despite the market turbulence in Asia.

Sotheby's will sell a rare 7.59-carat blue stone called The Premier Blue on Oct 7 in Hong Kong.

The gem is expected to fetch US$19 million (S$24 million) and Mr Quek Chin Yeow, deputy chairman of Sotheby's in Asia, said it would be a record high for diamond prices on a per-carat basis if sold at that price. But what should the man in the street look out for?

As an asset class, diamonds should not be the first choice for novice investors, since diamonds are not easily traded like gold and other commodities via a trading platform. Diamond prices need to be searched for on the Rapaport Price List. No two diamonds are the same.

The Rapaport Price List is the industry standard used for pricing of diamonds.

Mr Tay Thye Sun, 64, a consultant gemologist and president of Far East Gemological Laboratory and Institute, who has been in the trade for some 33 years, gave some tips on how serious investors can identify a good diamond.

"For example, look at its clarity, which is the purity of diamond. The fewer flaws it has, the higher the quality. For colour grade - the whiter the diamond, the better.

"Next is cut quality - a diamond that reflects light well is considered to be good quality."

Mr Tay added: "Once you know the quality of a diamond, which is its clarity, colour, cut and carat weight, look up the Rapaport price guide and you will know the value of your diamond."

Mr Gabriel Yap, a veteran investor who retired in 2009 and is now a special adviser at Golden Saints Resources, highlighted the argyle pink diamond, worth about 50 times more than a white diamond.

Every year, mining giant Rio Tinto holds a closely watched tender for the sale of such diamonds.

Mr D'Silva said the minimum investment for good-quality diamonds is US$10,000 for a one-carat diamond. However, Mr Tay stressed diamonds are appreciated for their rarity and aesthetic value more than monetary returns. "Diamonds are precious and durable, and can become a family heirloom."

Watches

Watches have always been associated with value and craftsmanship. Horology enthusiasts - or fans of watches - favour luxury watch brands like Richemont and LVMH, as well as timepieces from independent watchmakers such MB&F.

Mr Dominic Khoo, who trained as a watch expert with Antiquorum, a leading watch auction house, said choosing a right timepiece can be a viable investment.

Better known as a celebrity photographer, Mr Khoo is setting up a new watch investment fund that caters to watch lovers (see sidebar).

Unlike investing in precious metals for example, timing is not a factor to consider when investing in watches. There are various types of watches which would be considered investment-grade, such as limited edition watches made by well-known craftsmen or those worn by celebrities or historical figures.

Regardless of how rare a timepiece is, Mr Khoo said its value is still very much dependent on whether it can be sold at a certain asking price and market conditions. This is similar to a diamond's value.

Gold

For investors who wish to avoid the market turbulence, gold is always a safe-haven investment. Gold prices hit a a three-month high of US$1,423 an ounce last Wednesday, rebounding from a three-year low in June.

Ms Pamela Seow, 31, marketing and communications manager for Poh Heng Jewellery, said: "Gold has always been appreciated for its intrinsic value due to its limited supply and it is also a safe haven in a volatile economic climate.

"In addition, gold has always kept pace with inflation and stayed independent of key economic indicators." Citing data from the World Gold Council, she noted the attraction of the yellow metal as a long-term investment, as one gram of gold has jumped almost fivefold in price to US$53.30 in January from US$11.20 in 2003.

For the past three years, gold sales at Poh Heng have increased by at least 20 per cent annually.

The versatility of gold is also a selling point for investors as the precious metal can be bought in various forms, from gold bars to jewellery to gold futures or exchange-traded funds.

rachaelb@sph.com.sg

Watch how time makes money

The Watch Fund is an investment fund with a difference.

As the name implies, it aims to acquire rare investment-grade watches for investors to keep or wear, and is confident of a yearly minimum yield of 7 per cent.

Mr Dominic Khoo, who founded the fund, said he took inspiration for his fund by observing how a watch fund from Luxembourg-based Elite Advisers was able to outperform the Standard & Poor's 500 Index in the period from 2011 to last year.

Mr Khoo told The Sunday Times: "In that fund, you actually can't touch the watches, so it's very much like a hedge fund."

But he said he wants investors to have access to the rare watches, calling it "the most fun fund of all time". "The idea is, how do we get to a stage where people can actually have fun with the watches that they invest in, and at the same time make money.

"The fund technically owns the watches, unless investors want to pay a 10 per cent fee, based on the value of the watch, to take the watches out of the fund."

Depending on the investment horizon and lock-down period, the fund will call with profit options. The objective is to buy back the watches, with an agreed profit to the investor.

As fund manager, Mr Khoo will hand-pick four types of investment-grade watches on behalf of investors. Also, he said he will be able to circumvent long waiting lists for coveted watches, to acquire them for the fund, due to his business connections in the industry.

The Hong Kong-based fund will be officially launched this month, and has already secured 19 investors from South-east Asia.

There are plans to set up a Singapore arm in the future.

The timepiece aficionado, who can talk for hours about watches, said: "After I trained as a watch expert with Antiquorum, I learnt that this could be done. There is demand for the fund." Mr Khoo added that he will focus on growing the watch fund and he has retired from photography.


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