The winning bidder, Frank Vassallo, paid $675,000 for the privilege of affixing the state’s ultimate status symbol — a low-digit license plate — to his car.

Vassallo said he didn't have any set price in mind, but expected to pay more than five hundred thousand and less than a million.

On that same night plate number 507 went for $50,000, number 839 for $40,000, number 627 for $8,000, and number 9030 went for $8,000.  The Governor, Lieutenant Governor, and Secretary of State are assigned plates one, two and three.  Plates numbered four and above are available to the public.  The night’s prized plate was sold by the estate of its previous owner, who had recently passed away.  The prize it fetched was greater than the value of the rest of the estate.

The market for Delaware license plates is well-established.  A member of Vassallo’s family bought number nine in 1993 for $185,000, claiming low-digit plates are appreciating in value at 7% per year.

While all financial advisors would agree that license plates have no role in an investment portfolio, what about other collectibles – wine, art, and violins?

Collectible Funds

Investors have poured nearly $30 million into the recently established Fine Violins Fund, whose aim is to buy “undervalued” 17th- and 18th-century violins and restore them.  The fund’s CEO, Florian Leonhard, claims the asset class has appreciated 12.7% since 1950 and is targeting a return of 15% and a fund size of $80 million.  There is a universe of approximately 2,300 violins, and the fund plans to place the instruments with “virtuoso musicians” to enhance their value.  It is charging a 2-and-20 management fee.

Lodeveans Contemporary LLP is a closed-end fund seeking to raise $10 million to invest in contemporary art, targeting pieces priced under $100,000.  Like the violin fund, it is aiming for a return of 15% (net of fees) and will “return proceeds to investors” after a fixed life of five years.  “2008 is a good time to be a buyer (of art) if you are taking a five-year view,” said Stuart Evans, the founder of the fund. “It could be a difficult time to sell, though, if you find you need the cash quickly, and this in itself could mean interesting opportunities on the buy-side.”

The goal of the Wine Investment Fund is to “double investor’s money every five years” as they “buy, hold, and then sell some of the finest wines in the world in order to maximize investors’ returns.”  (There is no mention of the fate of the wines that are bought and held, but not sold.  Could it be that they are consumed?)  The fund’s web site shows impressive double-digit returns over the last five years.  It charges individual investors a 5% “subscription fee,” a 1.5% annual fee, and 20% of returns.

This week, Barron’s carried an article extolling the virtues of such funds.  It carried the following table of historical returns:

The authors of the article, Thomas Healy, a retired Goldman Sachs partner, and Mark Oshida, a consultant and violinist, argue that such investments make sense because of “fixed scarcity.”  The supply of Stradivariuses, Chateau Lafite Rothschilds, and Monets is known and fixed, unlike the shares of public companies, which can increase when new capital is raised.

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