Fractional ownership – the new way to invest in the rarest commodities | MarkMeets | Celebrity News, Music, Movies, TV, London Film Premieres

Historically, investing in rare diamonds required you to have millions of dollars to invest. However, thanks to a new fractional ownership exchange, it’s possible for retail investors to get in on the act finally. The launch of the Luxus marketplace has given fashionistas and diamond-lovers a chance to make cost-effective investments in eye-catching coloured diamonds.

Luxus was the brainchild of hedge fund specialist Dana Auslander and fashion journalist Gretchen Gunlocke Fenton, with the pricing of its new coloured gems weighing in below retail prices and just above wholesale.

Fractional investing is by no means a new concept. Retail investors have been able to acquire fractional shares in even the most expensive US stocks just by using a general investment account. Fractional shares work in the same way as buying shares ordinarily. However, instead of buying one whole share at $200, retail investors can buy ¼ of a share at $50.

Luxus adopts a similar approach by giving retail investors a chance to acquire 0.1% of a rare coloured diamond. Its first offering will be a .54 carat pink diamond, with 2,000 shares offered in a single gem at $200 apiece; this values the individual gem at a staggering $400,000.

How Luxus aims to bring diamond investing to the masses

The theory behind Luxus is that retail investors will be able to make a steady return on their modest investments. The rarest pink-coloured diamonds are some of the most valuable gems on the planet today. They can retail upwards of $1.2 million per carat. These gems have also matured in value by anything between 9% and 12% per annum in the last few years, based on the Fancy Color Diamond Index (FCDI), which was established to monitor the wholesale market. In the last 17 years, high-grade vivid pink diamonds yielded 427.8% growth. Even lower grade pink diamonds have matured by 325.6% during the same period.

To put these figures into context, the price of gold rose by 300% during the same period, and the S&P 500 index failed to outperform the growth of high-grade vivid pink diamonds (384%).

The .54 carat vivid pink diamond, traded fractionally for the first time on Luxus, was mined from the Australian Argyle diamond mine that now ceases to exist. At one time, this single mine was the source for nine-tenths of the pink diamonds available on the planet. Luxus did a deal with family-run diamond firm Kwiat to open these diamonds up to broad-based investors, with Kwiat having purchased them as a long-term financial investment from a sealed-bid auction in 2016.Luxus obtained pre-seed funding worth over $2.5m from a collection of private investors, most notably fashion designer Veronica M. Beard. Its CEO, Dana Auslander, spent several years working in asset management for private hedge funds and is keen to utilise her knowledge and experience to give retail investors an alternative avenue for their savings. The next 12 months are the proving ground for the Luxus concept. If investments in Kwiat’s high-grade vivid pink diamonds go to plan, a full roll-out of its marketplace will occur in 2023, including the addition of yellow and blue-coloured gems to invest in.

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Adam Regan

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Features and account management. 3 years media experience. Previously covered features for online and print editions.

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