Disclaimer, this is just an interesting thought experiment and purely hypothetical
If a large university endowment was looking to get $5-10m of exposure to collectibles, and they approached you to become an advisor (part of an expert network), to help source deals (if the endowment ran the purchase of the cards in-house), or add you as a manager (where you would purchase cards using the endowments funds), would you be interested?
Let’s assume that they pay you 1% of assets under management (so the $5-10m once invested) and 25% of profits. This means that you will have $50-100k in base comp per year with the possibility for significant profit sharing (carry) when gains are realized. [A fund of this risk profile would likely be structured as a 10 year drawdown fund with expected DPI of 4x - meaning that 4 dollars is netted for each dollar invested, meaning that profit sharing / carry would equal up to $7m (likely less because of hurdles, but you get the point).
Would there be sufficient alignment of interests, or would the advisor be tempted to offload their own / or close associates’ less-than-ideal inventory? Would this amount, $5-10m, be difficult to deploy over a three year period or harvest (sell) over a similar period 8 years down the line? Would advisors view this capital as competing with their own business (and if so, how could this be resolved)?
This question is more geared towards those with 10+ years of experience, high 6 or 7 figure collections, and extensive sourcing ability.
MIT did something similar to this in the early 2000s with fine art in Europe.
As an advisor you dont want to get your reputation hurt because you are unloading your friends less than ideal inventory.
Hard part is you need to let go of all your emotions when managing other peoples money. I like base 1st edition so much but it might not be the best investment.
I like to do endless research and watching trends / consumer behaviour but it is so much easier when you do it with your own money instead of managing it for somebody else.
Edit: basically Smpratte is a free advisor, you just have to watch all his youtube videos and your set.
In today’s day and age you wouldn’t be able to spend that amount of money in 3 years unless you’re willing to buy at/above market and set new records on most of your purchases.
The majority of the people who can afford to hold these items now are well set financially and money is very rarely an incentive to sell.
1% is the standard management fee for AUM, excluding select / well-known hedge funds and private equity funds. The days of 2 and 20 are over due to the competitiveness of the GP landscape, and fee will only continue to be compressed in this difficult fundraising environment.
Somebody I know worked for an auction house for a year. The auction house tried to enter the collectible cards and modern pop culture art market. Anyways, regardless of compensation, the guy ended up offloading most of his own cards/ items and those around him.
This would likely be the outcome for your hypothetical scenario. The fund manager has absolute purchasing decision and investors have no idea of the market value of anything you buy.
