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Home > Investments > Alternative Investments

By James Kenny | Published Apr 07, 2008

Anchorage is ready to rock with guitar fund

Anchorage Capital Partners is preparing to rock the investment world with the launch of The Guitar fund.

The closed-end vehicle will invest in quality vintage guitars, some of which can trade for as much as $250,000 (£125,600) and will target both old and young high net worth individuals.

Tommy Byrne, co-founder of ACP and chief investment officer of the fund, said: "We have been putting this fund together for around two years and are aiming to raise around €70m (£55m). We think it would be a solid investment as historically, when the major markets have collapsed, the alternatives market has plateaued until the traditional markets picked up again."

The fund will be listed on the Channel Islands Stock Exchange, although it is dependent on finding a lead investor before launching.

It will be advised by a number of guitar experts and musicians including Elliott Randall, best known for his lead guitar work with the band Steely Dan, and Robbin Thompson, once the lead singer for the Bruce Springsteen band Steel Mill.

Although the fund has been attracting mostly institutional investors, Mr Byrne said the fund had also received interest from high net worth clients who could invest for a minimum of €250,000.

Investors in the fund will also have the opportunity to actually play the guitars they invest in and take them home if they wish.

Mr Byrne explained: "The vintage guitar market, like some of the other exotic investment strategies such as art and wine funds, can be enjoyed while holding them, but where this market differs significantly is in how the guitars improve every time you play them.

"The vibrations on the wood improve the sound of the guitars, so the more they are played the better they sound and are worth. The younger generation knows this and has an increasing appetite for acquiring their favourite models."

Mr Byrne said the fund would encourage a structured lending strategy that will allow investors to borrow the guitars so they would continue to be played and enjoyed.

The fund will lend guitars out to well-known musicians for tours and other events, which would add value to the investment as it obtains memorabilia status.

Mr Byrne, who also owns a guitar shop in Soho, said he often encountered famous rock stars and musicians who were eager to borrow a guitar for a particular recording or show, but most places were unable to accommodate them.

By offering this service the fund would be enhancing the asset's value, he said.

The fund will have a 10-year life span and will be tracked by the 42 Index, which is a conservative tracking device for the vintage guitar market and has returned more than 31 per cent annually since it was launched 17 years ago.

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