Avarae Global Coins

Funds that invest in gold have been available to gold bugs for several years. But, if you are a coin collector, your options for investing in them via a listed fund have been limited historically.

Last May, Avarae's Global Coins fund broke ground when it was registered.

While Ian Goldbart, an adviser to the fund, does not promise returns of 20 per cent to 40 per cent, the fund represents an opportunity for hobbyists and others to balance their exposure to equities and bonds with an interesting alternative asset.

"We're not suggesting you sell your house and put money into coins. It's a real cottage industry," he says.

The fund has attracted some high-profile investors and raised £6m so far.

Merrill Lynch, the fund manager, holds a 15 per cent stake in the fund. The £5m fund is listed on the Alternative Investment Market. It attracted a flurry of attention a few months ago when its managers paid £400,000 to purchase Edward III's gold double florin, a rare find that dates to 1344 and was only in circulation for a year.

The price was the highest paid for an English coin and the British Museum owns the only two others of its kind.

Coins in the portfolio include: gold and silver coins struck in Macedonia, the Thracian Islands, Attica, Crete, Phoenicia and Egypt between the 3rd and 5th century BC; gold and silver Indian coins from the Mughal Empire, Independent Kingdoms, Princely States and Sikh Empire; 17th and 18th century gold five-guinea pieces from the reigns of Charles II, William III, Anne, George I and George II; and a gold 17th century English five-guinea piece issued in the reign of Charles II, minted from gold brought back from Guinea by the Africa Company.

Advice for what to buy, what to sell and when to do so is provided by members of the fund's advisory board, whose chairman is Sir John Wheeler, a coin collector for many decades.

"They really vet what we recommend," Mr Goldbart says. Once a month a group of coins is presented to the board whose members select the ones they like. At the moment, about 60 per cent of the fund remains in cash and about 40 per cent of it has been invested.

Building up the fund's holdings in far eastern and Islamic coins is a goal. But the one sector Mr Goldbart and his team are avoiding is the US because it is perceived as too competitive a market.

"It's by far the largest market in the world and coins are almost an industry there. But you have to be very careful because it is easy to overpay," he says. Mr Goldbart is reluctant to talk about coins in the pipeline as publicity would defeat the purpose of building up a position.

"You have to keep quiet about your picks," he says. "If we're trying to build up a stake in something that has good potential in the next three to five years, it's not a good idea to tell everyone what you're looking for."

There is no minimum investment as investors are buying shares in an Aim-listed company. The performance fee on the fund is 20 per cent if it returns more than 10 per cent.