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Sweet-sounding investment

21 June 2011 By Richard Beales

A treasured and near mint-condition Stradivari violin, made in 1721, just set its second auction record – 40 years after its first. The instrument, which fetched 9.8 million pounds ($15.9 million) was sold to benefit victims of the Japanese earthquake and tsunami. But for the purely commercially minded, this particular asset also delivered a healthy annualized return.

The Lady Blunt Strad – named after a former owner, Lord Byron’s granddaughter – was the jewel in the collection of Japan’s Nippon Music Foundation, and the sale is a generous gesture to the tens of thousands of Japanese battered by the twin natural disasters and the nuclear emergency that followed.

The same violin appeared at a Sotheby’s auction 40 years ago, when it also set a record. That was for 84,500 pounds, some $200,000 at the time, according to Tarisio, the online specialist auction house that sold the Strad this time around.

It’s rare for precious stringed instruments to be sold publicly – more typically they change hands privately, often for far more than examples that are auctioned. It’s even rarer to find the same instrument show up twice. That makes it hard for the relatively few advocates of musical instrument investing to point to a track record.

Still, one such proponent, Stradivari Invest, claims a 10-15 percent annual return is typical over the long term for very rare instruments. The Lady Blunt bears that out. In pounds, the annualized return over four decades has been just shy of 13 percent, and it’s just a percentage point or so less in dollars.

 

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