This document from Citi Equities discusses classic cars as an emerging asset class for high net worth individuals. It notes that classic cars provide capital gains tax benefits, appreciate in value similarly to art but with less volatility than stocks, and can be both an investment and hobby. The document highlights data showing classic car indices outperforming the S&P 500 in recent years. It argues that Citi could capitalize on this emerging market by creating an advisory service for wealthy clients centered around classic cars given the bank's global reach and the author's experience in both the car and finance industries.

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Classic Cars as an asset class
Dan Squires

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Why HNW individuals are investing in classic cars
 A rare CGT free investment (in the UK at least)
 “Real assets” that are by their very nature, scarce
 Considerably better value than art
 Better returns and lower volatility than equities
 Almost unique in ability to be a hobby AND an investment
 Modern cars are too fast to enjoy

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The “asset class-isation” of classic cars
 The HAGI indices have helped the notion that classic cars can be thought of as a financial asset

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The “asset class-isation” of classic cars
 Hagerty’s blue chip index, which tracks 25 collectible automobiles from the post-war era, gained roughly 230% over
the five years ended in May 2014. That easily tops a 117% increase in the S&P 500. The Hagerty blue chip index
was up about 14.7% year-to-date through May 2014

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The “asset class-isation” of classic cars

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Inflows always chase returns…
 From Bloomberg. Which highlighted that in 2013 prices for historic exceptional vehicles rose 47% according to
auction data

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Many column inches in influential media…

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Other anecdotal evidence
 The biggest attended event in the UK last year was the Goodwood Revival weekend
 150,000 tickets were bought in 2013
 In its first year, 1998, that was 68,000…

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Other anecdotal evidence
In August 2014 a new record was set at Bonhams “Quail Lodge” auction.. the
most valuable car ever sold: at $38m - the seminal Ferrari 250 GTO

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From the 2014 Wealth Report

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Some of our oppo have been active for years

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Extracted from Credit Suisse private bank client magazine

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What do EFG have to add that Citi couldn’t??

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A gap in the market
 Car dealers are good at selling cars but poor at offering advice
 Customer service has failed to keep pace with rising values and client expectations
 Auction houses again are good at selling cars and creating excitement but not much else
 Most investment professionals probably don’t understand classic cars
 Many clients will have a desire to own a classic but may not know where to start
 A high proportion of the world’s most prestigious classic car events are in the US such as Pebble Beach and The
Quail – hence a natural fit for a US bank
 And yet – this is a global market, the assets are easily transportable, and there is huge interest in emerging
markets – hence a natural fit for a Global franchise
 A Citi classic car advisory team can be at the centre of the Venn diagram: advice / finance /
sourcing / client retention and entertainment / storage / insurance etc.

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What is my value added?
 20 years of experience on both buy and sell side
 Sales skill and client service skill
 Comfortable dealing with “C suite” calibre customers and HF principals
 A passion for classic cars (indeed all cars)
 An owner of a classic car (1972 Porsche 911) hence a practitioner
 Financially literate and able to make the case for classic cars in a diversified portfolio
 A Citi MD with a hunger for a new challenge beyond equities
 A good network of contacts in the UK