Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 1:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives recently caught up Morano, director of the Zurich-based Custoza Family Office, to discuss the performance of his Classic Car Fund and his predictions for the future of investing in classic automobiles.

How did the Classic Car Fund do in 2014?

The fund has performed 6.16% (I class) and 5.9% (P class) in 2014...

To explain the classes: Class I (minimum investment €200,000) has a lower management and performance fee. The cars in both classes are the same, the performance is different due to the the assets under management in each class.

The Dox Graph (the German Old-Timer Index) indicating a performance of 4.5% in 2014.

How many cars does the fund currently own?

At present five cars; two Ferraris, two Lancias and one Jaguar.

Could you tell me about some of the cars you've bought?

Seven cars have been purchased by the fund since inception. Details regarding some examples have been published in our regular newsletter for example—the Lancia Belna Cabrio 1936, the exceptional MG K3 and the 1970s Ferrari 365 GT 2+2.

The Ferrari 356 was sold after a hold of only three months with a net gain to the fund of 13.9%. Nineteen months after purchase and some valuable public time in a boutique museum in Italy, the fund sadly said goodbye to the 1933 MG K3 with a 25.3% performance. Full buy and sell price are published for investors via the annual report; of course, the true value of the cars lies in their unique histories, classic lines and delightful individual characters, only a small part of which are touched by the fund. Discovering ideal cars for the fund (that are in top-class condition, with full histories and excellent pedigrees) is a key part of sustainably growing the fund and achieved via various routes including the public arena, private sales and recommendations.

When we last spoke in 2011, you said the fund could put a 3-5% stake into car-related stocks, 70% into cars and 25% in cash, is this still your strategy?

At this particular moment, the fund is running with a larger cash percentage than usual due to the successful sale of the MG K3. Sale details will be published in the next newsletter due out shortly. There are no stocks held at the moment and the strategy is to keep up to 25% in cash for redemption or if we find a interesting car for purchase, in order to act quickly should the right car be available for the fund.

You had also said you might generate extra income lending the cars to movie makers or museums, have you done any of that?

One of the cars had indeed been kept for public display by a museum for a short time, this was not to the investors' monetary benefit but as a donation by the fund to the world of cars and car history— another of the funds` commitments to opening up the world of the classic car.

What are your current assets under management? What is the minimum investment?

Our AUM is below €10 million and the minimum investment is €10,000 in the P class and €200,000 in the I class

What do you foresee for the Classic Car Fund in 2015?

The fund further expects growth in this sector. We are also offering TCCF Collection, wherein individuals are guided through the process of owning a car from the acquisition, storage, insurance, maintenance of the vehicle right up to eventual sale. The fund has a proven track record and can act independently with no conflict of interest.

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