Spear’s spikiest columnists on the latest gossip and goings-on in the City and beyond
Name game
Hedgehog dropped in on a seminar held by private investment office Stanhope Capital. They assembled independent experts in each of the investment classes traditionally held by British families and reviewed their characteristics in terms of ability to beat inflation, expected returns, correlations, liquidity and tax efficiency.
Sounds dry? Depends how liquid you like your account.
Related
‘Very few families have access to comparable data which helps them make rational allocations across these varied asset classes, so we thought we would provide this,’ explained Stanhope partner Guy Paterson. The speakers included Savills on residential property, Mayfair Capital on commercial property, Fisher German on agricultural land, Timothy Sammons Ltd on fine art, Stanhope Capital on quoted securities, Hampden Agencies on Lloyd’s underwriting and KPMG on the taxation implications. (When asked which was the greatest threat to family wealth — inflation or taxation — the great majority decided that it was taxation.)
Lunch resembled a reunion of the great landed estates sprinkled with earnest family officers from the ranks of the successful entrepreneurs. ‘The landed estates have seen farmland rise from £2,000 an acre in 1994 to £9,000, so now they want to diversify. The entrepreneurs envy the inheritance tax advantages of agricultural land and have their buying boots on. It could be a match made in heaven,’ observed one of the guests.
To the surprise of many, the stand-out proposition of the day was Lloyd’s underwriting: 17 per cent internal rate of return since 2001 (even beating gold), no correlation with equities and underwriting assets are exempt from inheritance tax. Time to put your name behind the
Names, perhaps?
Content from our partners
Bank on it
Europe, Europe. Only two years ago the continent was in crisis, sunk by its banks, and then Mario delivered his ‘whatever it takes’ moment. There were still chances to make money — those buying ‘Global Europe’ did well, European champions selling to Asia or South America, like Spanish clothing retailer Inditex. Or take Finnish elevator company Kone, which only went up: providing lift systems for the Chinese building boom was lucrative.
But more recently the EM slowdown has done for Global Europe and the latest theme for smart managers has been… European banks.
They might sound toxic, but context is king: in the troubled periphery, debt problems are being addressed, with fiscal accounts moving close towards primary surplus and current accounts being balanced. Eurozone unemployment is starting to fall and the bloc’s GDP rose by 0.3 per cent in the second quarter.
In the bank sector itself, much work has been done to stabilise these troubled institutions. In Greece, two of the major banks have been recapitalised and are now well positioned to deliver good margins and returns on equity, trading at good valuations. The key now will be to see if their non-performing loan ratios have finally peaked, in which case that could signal a buy. The results of recent stress tests should shed more light on this.
Either way, investors shouldn’t hang around too long; this is the kind of play that makes stars of contrarians. Get involved before it becomes consensus.
Joe McLoughlin and Julian Howard, GAM (joe.mcloughlin@gam.com)
Brush up
Spear’s has a good track record with Frieze Week, those seven days of art fairs, parties, exhibitions, parties, dinners, parties and air-kissing: our annual Frieze Diary (on spearswms.com) talks to the big names and reviews the key shows. But at the end of every heel-pounding day, we trudge home to Zone Two. Imagine if you could rest your head in one of Zone One’s most desirable beds.
45 Park Lane has been supporting the art scene since it opened, not least in the range of British artists it hosts on its walls, among whom are Damien Hirst, Joe Tilson and Richard Young. (The lunch they held there for those artists, who also include Sir Peter Blake, Martin Fuller and Christian Furr, was quite something.) Now they’re going one better and putting the fizz in Frieze.
Their ‘A Brush with Frieze’ package includes an overnight stay, tickets to Frieze London and Frieze Masters, a copy of the 45 Park Lane Art Book and (because inspiration will no doubt strike) a Winsor & Newton table box easel when you leave.
It’s more than this, of course: there is an invitation from sculptor Jane McAdam Freud, daughter of Lucian, to an open-discussion breakfast at CUT, Wolfgang Puck’s modern American steak restaurant, and a private guided tour of Jane’s personal studio, where she will talk about her projects and offer exclusive sculpting classes on request.
For enquiries or to make a reservation, call 020 7317 6503 or send an email to reservations.45L@dorchestercollection.com and reference the ‘A Brush with Art’ programme
WLTM donor
Good news arrived in Hedgehog’s inbox recently: a Canadian billionaire philanthropist and his wife have given £75 million to Oxford University, in particular to the Rhodes Trust which runs the scholarship scheme for overseas scholars.
John McCall MacBain, who made his money as the owner of Trader Classified Media (remember classified ads?), told a ceremony of Rhodes Scholars at the Sheldonian Theatre in Oxford: ‘Receiving the Rhodes Scholarship and attending Oxford were among the highlights of my life. These scholarships have been helping develop future leaders for over a century.’
This gift — one of the largest Oxford has ever seen — takes a modern form: £25 million is a guaranteed grant and £25 million is to expand the programme to new locations (currently it’s students from ex-British colonies, including America, in the main) — but £25 million is to match other money raised by the university. This idea of challenge funding is to ensure the recipient doesn’t rest on the new piles of cash but goes out and makes its case to other donors.
Spear’s has extensively covered educational philanthropy before, including an interview with an equally large donor, Michael Moritz, whose £75 million is meant to stimulate a package of £300 million. These are the biggest donations to the university, although Dr James Martin’s £62 million for the Oxford Martin School for research into 21st-century problems is hardly negligible.
In the eternal Varsity competition, which stretches across every field, Cambridge has the lead for largest donation: Bill and Melinda Gates gave £132 million in 2000 (adjusted for inflation, that’s £188 million today). But while Cambridge fundraised £1.17 billion for its 800th anniversary, Oxford Thinking took in £1.3 billion and is now looking to make it £3 billion.
Of course, these donations pale next to American universities. Stephen Ross gave $200 million to the University of Michigan, tiny Centre College in Kentucky got $250 million and Bill and Melinda Gates gave $1 billion for a scholarship programme across different universities. Let’s hope the arms race we see in paintings and properties can work in philanthropy too.
Rock on
A kiss on the hand may be quite continental, but nothing is as English as Harrods Fine Jewellery Department, which opens a new room in November, doubling its size (and its sparkle).
As is the trend, there will not just be smart brands on the counter like Faraone Mennella and Buccellati but also new boutiques — Hermès, Garrard, Dior Joaillerie, Theo Fennell and Boodles — for a complete world of fine jewellery, from younger artisans to established houses. (It is, in fact, Hermès’ first stand-alone fine jewellery and watches boutique anywhere in the world.)
Garrard, which is joining Harrods for the first time, will have a private VIP room for customers, while Dior Joaillerie upscales to its own larger boutique. It’s all going to look so French and chic.
Italian craft offers young and old: Faraone Mennella (more of which on page 124), a young design-led contemporary jewellery partnership, and Buccellati, now in their third generation and known for their lace rings and necklaces. Both will also offer one-off pieces.
The original Gem Rooms — how evocative the name — were launched in 1911, and while jewellery, fashion and indeed society have changed since then, the hallmarks of the Harrods standard of service endure.
Bully for them
Next-gen millionaires are more bullish investors than their older-generation counterparts, with almost four in ten buying into high-risk asset classes such as venture capital and derivatives. That’s according to new research by US-based financial services firm Fidelity Investments, which surveyed over 540 individuals with investable assets of at least $1 million.
It found that 81 per cent of Generation X and Y millionaires — those up to 48 years old — said they preferred to pursue aggressive investment strategies, compared to 27 per cent of the baby boomers. The younger HNWs weren’t just more bullish about investing, they were also more confident about their own abilities, with 71 per cent considering themselves knowledgeable about investing, compared to 44 per cent of their old-generation counterparts.
Perhaps surprisingly, then, the report found that next-gen millionaires were also more likely than the older generation to turn to financial advisers for investment recommendations, with 92 per cent using a financial adviser, compared to 68 per cent of the baby boomers.
But younger millionaires aren’t just focused on how to maximise their money, the research found. In fact, they are more likely to indulge in comforts than the older generation. Some 87 per cent of Gen X and Y HNWs, for example, spent their holidays abroad every year, compared to only 56 per cent of the baby boomers.
Similarly, 63 per cent of the next-gen millionaires owned a second home and nearly four in ten flew first class, compared to 21 and 5 per cent respectively for the older generation.
And if they like to spend more, Gen X and Y millionaires also like to give more, as they average $54,000 in annual philanthropic donations, compared to $12,000 for
their older counterparts.
Chinatown
Non-UK citizens have bought almost eight out of ten luxury new-build homes sold in central London in the past two years, a study has found.
According to research by Savills, Chinese and Hong Kong nationals were the largest buyers by volume, having purchased 39.5 per cent of the capital’s newly
built prime residential properties (more than £1,000 per square foot).
They were followed by British buyers (21.2 per cent), Middle Easterners (18 per cent) and Russian and Eastern European (10.7 per cent).
The report also suggested that this wasn’t bad news for occupancy, as most of those buyers were effectively resident in London.Yolande Barnes of Savills told the Financial Times that accusing foreign buyers to be causing a spike in London house prices is ‘verging on the xenophobic’.
Ashes to ashes, clutch to clutch
An eccentric entrepreneur in Brazil has buried his expensive Bentley to make sure he will keep enjoying it in his afterlife. Chiquinho Scarpa buried his BentleyContinental, which is worth more than £300,000, in the garden of his estate in Jardins, Sao Paulo, in September. The funeral had every element of a real one, including a wreath for the car.
‘I decided to do as the pharaohs: I will bury my favourite car, my Bentley, in my house garden,’ the businessman announced on Facebook a few days before, adding that he was inspired by a documentary about the pharaohs he had watched on TV.
But Scarpa interrupted the funeral to reveal the real purpose of his initiative: to draw attention to a national campaign in favour of organ donation. ‘I buried my car and everyone thought it was absurd when I said I was going to do that,’ he wrote on Facebook. ‘Absurd [are those who] bury their organs, which could save many lives. Nothing is more valuable. Be a donor; tell your family.’
Tinker, talior, artist, thief
As long as there have been artworks, there have been people who have stolen them. Pretty much until Andy Warhol, artworks possessed similar desirable qualities: beauty, uniqueness, expense, the hand-making of the artist. (Vermeer’s The Concert, pictured, went from Boston in 1990.) Finally someone has documented that long history of looting.
That person, no less, is Ivan Lindsay, one of Spear’s long-standing art writers. (You can read him on the future of Detroit’s collection of masterpieces after its bankruptcy on page 104.) His A History of Loot and Stolen Art begins with the pillaging of the ancients, moving through Charlemagne and Cesare Borgia to the Second World War.
The final chapter looks at recent thefts of art. Now that it is a multi-billion-dollar business, lifting paintings has never been more profitable. If you want a book where you can learn from others’ mistakes so you can keep your masterpieces in situ, Ivan’s not so terrible.
A History of Loot and Stolen Art is published by Unicorn Press on 3 November (£40)
Jam today, jam tomorrow
Why do good things always come in hampers? Tell us truly — have you ever been disappointed with that quintessentially English confection of carefully selected comestibles? Harrods, of course, has a long tradition of filling baskets with the very best.
This year, it aims to surpass even its own standards of luxury, with The Decadence, a limited edition hamper for Christmas 2013 (£20,000). Fine wines are complemented by caviar and chocolates, foie gras, charcuterie and fresh cheeses. Aged beef with the golden olive oil, decorative cakes and brandy butter, jams and teas provide a festive extravaganza.
A hamper is the restful bonanza at the end of that stressful season which is called festive, and its pleasures are simultaneously in its simplicity — everything you could want to take you through dark winter days when the goose is gone — and in its infinite complexity and variety.
Even in the bleak midwinter, afternoon tea is a ritual that endures, and there is a hamper for that too. The Cartwright and Butler hamper (£120) has jams and preserves — better than home-made — and chocolate wafer fingers, butter oat crumbles and English breakfast tea. And, as with every hamper, you have a pretty and practical reminder once the goodies are gone — until next year’s comes along.
For more information on the entire Harrods Hamper & Gift collection for 2013, the Harrods Gift Card, corporate gifts and bespoke services, please call Corporate Service at Harrods on 020 7225 5994 or email corporate.service@harrods.com
