The Labor Party has caved in to pressure from the collectables sector and will allow Self-Managed Superannuation Funds (SMSF) to continue to invest in rare coins and banknotes.
Had the Cooper Review had its way, rare coins and banknotes would have been banned from being held in a SMSF. The Review recommended investors be forced to sell their collectables within five years, or else transfer their funds in to an APRA regulated environment, which would require oversight from professional trustees.
In a media statement issued on 30 July 2010 the Federal Government, in its first response to Jeremy Cooper’s review of the Superannuation sector, has rejected the proposal that self-managed funds be forced to divest of coins and banknotes. Trustees will however have to follow stricter guidelines on their purchase, storage and valuation; principles that we totally support and already adhere to.
The Cooper Review appears to have worked under the theory that trustees choose tangible assets because they are driven by an emotive compulsion to possess them; a point on which we totally disagree.
An emotive compulsion to acquire rarities may have been part of buyer’s psyche in the 1940s and 1950s but is no longer valid in today’s market. Whether it is $2000, $20,000 or $200,000, the financial outlay involved in acquiring an Australian rare coin or banknote is, relative to the buyer’s means, substantial - and goes far beyond whimsy.
Coinworks buyers are strategic and informed and acquire coins and banknotes as part of a considered investment strategy tailored to meet their retirement needs. Guidelines for purchase are clearly set out on our web, and in our written communications with clients.
The drive to acquire a specimen that is known by only one or two examples may seem to be emotionally driven. The reality is however that rarity is the prime force for underpinning capital growth. So is it emotion or pure savvy that drives buyers towards elite rarities? We suggest the latter.
The results of the Cooper Review and the Government’s recognition that collectables are a legitimate asset class may well be a trigger point for further expansion of the numismatic industry.