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Not yet coining it at Avarae

Avarae Global Coins is the obvious option for investors who wish to have exposure to coins but cannot commit the £5,000 or more necessary to invest directly. With more than a 1,000 holdings worth around £10m, this trust also provides instant diversity for the price of a few shares.

Although its shares trade in London, the trust is domiciled in the Isle of Man, which means the trust does not incur corporation tax, and investors do not have to pay stamp duty on their purchases.

The trust is run by an experienced team at international coin dealer and numismatic adviser Noble Investments, which has driven its strong net asset value (NAV) returns. It's helped that coins generally have performed well recently. The managers invest in the rarest and highest-quality segment of the coin-collecting sector globally, which they hold for the long term, as well as taking advantage of short-term trading opportunities. The overall aim is long-term capital growth.

A major problem for investors has been that its share price has lagged or fallen even as its NAV has risen, leading to a big discount to NAV of almost 30 per cent. This is partly because of the trust's small size and the fact that its shares trade on the more volatile Alternative Investment Market (Aim). It's also because the underlying investments are less easy to buy and sell than shares.

However, the disparity appears to be improving with share price not far behind NAV over one year, and Avarae's managers are looking at ways to narrow the discount. They have already undertaken share buy backs. If its strong investment performance is recognised and the discount tightens, the current price could be a bargain.

Aim is not a recognised investment exchange so you cannot hold these shares within an individual savings account. Avarae Global Coins also has a very high total expense ratio, although generally investors can expect to pay more for offshore funds which invest in esoteric assets.

More data for Avarae Global Coins can be found here.

AVARAE GLOBAL COINS (AVR)

PRICE9pNAV12.5p
MARKET CAP£7.3mPRICE DISCOUNT TO NAV-29.57%
No OF HOLDINGS:1,000+1-YEAR NAV PERFORMANCE12.73%
SET UP DATE24 May 20063-YEAR NAV PERFORMANCE20.05%
MANAGER START DATE24 May 20065-YEAR NAV PERFORMANCE37.40%
TOTAL EXPENSE RATIO4.39%YIELD0%
GEARING100%MORE DETAILSwww.avarae.com

Source: Investors Chronicle, *Avarae.

Performance data as at 7 July 2011.

Examples of holdings

Holdings
Lucinius II: extremely rare gold Aureus, mint of Nicomedia, AD 321-322.
Extremely rare 429h Mirdasids Dinar struck under Shibl al-dawla Nasr I
George III Pattern Guinea by John Tanner, 1761.
Edward The Black Prince, Hardi D'Or struck in Bordeaux.
Licinius II, gold Aureus, mint of Nicomedia AD 321-2, rare.
Scotland, William II, Darien Company, Pistole 1701, extremely rare gold coin.
England, Edward VIII Matt finish Pattern Florin 1937, mint state and thought to be unique.

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