Novel Fund Targets Colored Diamonds

Jul 5 2011 | 9:11am ET

The newly launched Novel Diamond Fund I focuses on a novel asset: colored diamonds.

The Caymans-based, closed end fund—the first in a series from Novel Asset Management—focuses on gems with values of over $1 million.

Says Alan Landau, a fund director, “Out of 10,000 carats, only one carat is colored, yet there’s tremendous demand for these diamonds. At recent auctions, wealthy collectors and investors have set record prices for them, including the $46 million that a London jeweler paid for a 25 carat pink diamond. This was the highest price ever paid for a diamond.”

Although Landau expects colored diamond supplies to remain tight and demand to remain strong, supporting diamond prices for the foreseeable future, he says this is not the basis for the fund’s strategy:

“The fund is really a trading business, not a buy-and-hold investment company,” he said.

Novel Asset Management is part of the Novel Collection group, a specialty colored diamond trader. The fund will use the parent company’s supplier network to purchase polished colored diamonds then sell them at substantial mark-ups to the retail trade and diamond consumers.

Says Landau: “Through Novel Collection’s seven offices around the world, including in the major diamond centers of New York, Antwerp, Tel Aviv and Hong Kong, the fund will have access to diamond sellers and diamond buyers, and Novel Collection’s staff of over forty people worldwide has decades of experience trading in colored diamonds. We believe that the fund can generate substantial returns even in a flat diamond pricing environment by exploiting the wide spread between purchase and sale prices.”

The fund is accepting new investors during the three-month period ending October 1, 2011. Afterward, it will be closed to new investment. The fund will operate as a short-term private equity-style vehicle, buying and selling diamonds during its two-year term, and then liquidate its portfolio of diamonds and return all capital to investors.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.