Precious Time Friday, June 15th 2012
Green-lighted for launch in January 2011, Precious Time from investment company Elite Advisers is the first fund to specialise in vintage watches. Manager Alfredo Paramico describes its characteristics.
What type of watches does the fund invest in?
Alfredo Paramico: We only consider for inclusion in the fund rare watches in excellent condition and of the highest quality. This has been our strategy from the start, as the two timepieces acquired at the last Antiquorum sale show, to wit a Patek Philippe Ref. 3445 in white gold and a Rolex Ref. 1587 Jump-Hour Prince Railway. We are prepared to pay a premium for quality. Today's market has no room for watches in average condition. This is why we acquire the majority of our watches from private collectors, most of whom and whose collections I'm personally acquainted with. We also consider private resellers and auctions, the disadvantage of the latter solution being the commissions.
What is the fund currently worth?
Sixteen million euros, meaning roughly one million in new investments a month. We're interested in watches by Patek Philippe, Rolex, Audemars Piguet, Breguet, Omega, Longines and Cartier. We allocate 95% of the fund to vintage watches, as contemporary timepieces don't command any particular value on the market at the present time. The one exception is limited-edition Patek Philippe watches whose rarity means they will appreciate in value. They account for the remaining 5%. We manage a well-balanced portfolio, currently with 470 watches. We maintain a sufficient level of liquidity to be able to respond to redemption requests. Last year, for example, we sold 40 watches, around 10% of the portfolio, all of which went for higher than their valuation. A good piece of business, then. No timepiece joins the collection without first being examined by a third party who inspects the case, dial and movement. They are then sent to Geneva free port, which has the advantage of being VAT-free.
How do you calculate the value of the fund?
We weigh three factors. The first considers how the models in the portfolio have performed at auction. The second looks at the level of global trade in vintage watches. The third compares the quality of our portfolio with what we're seeing on the market. This gives the net asset value which we initially published quarterly and, as from this month of June, monthly. This valuation is also carried out by an independent expert, Romain Rea, an internationally respected specialist who has his own vintage watch store in Paris. He is also a consultant for Artcurial and for the Heritage department at Vacheron Constantin. We're extremely satisfied with yield so far. When we launched the fund, we were targeting a rather ambitious net return of 15%. Still, we're not far as last year we achieved 12%. As I explained earlier, this is because we prefer to maintain a high level of liquidity hence a slight shortfall in performance.
What would you say would be the optimum size for the fund?
Rationally, we could go up to a hundred million euros. And if we start targeting the very important watches such as the two fine Breguets sold by Christie's in May for EUR 5.7 million, we could easily envisage a capital of two hundred million euros. There's room on the market. ■
Alfredo Paramico was talking to Christophe Roulet