Music to fund's ears

Music played on rare violins, violas and cellos brings joy to audiophiles and may also soon bring happiness to the wallets of investors. That is the goal of the Artist Rare Instrument Fund LP, a New York- based private-equity fund that invests in rare stringed instruments created by Italian master artisans Antonio Stradivarius, Giuseppe Guarnerius del Gesu and others in the 17th and 18th centuries. Why rare instruments? Demand among musicians and collectors for the exquisite instruments has increased their value exponentially since the 17th century, said Anthony Finley, a general partner of the fund, attorney and music lover. In just the past 10 years, the most desirable instruments have appreciated as much as 12% annually, he said. But the fund's intention isn't to buy up rarities. Although it will own a number of instruments, the fund will invest primarily in instruments already owned and played by world-class artists, unlocking a source of profit for investors and providing liquidity for artists, Mr. Finley said. “That way, investors looking for a good investment can access the value of rare instruments, and the player can continue to play,” he said. The fund isn't for everyone. The minimum investment is $1 million, the maximum for any individual investor is $10 million, and there is a five-year lockup period. Following the expiration of the lockup, an investor may sell to the partnership or other limited partners a minimum of $1 million of his or her interest. Management fees are 1.5% a year, with a 25% incentive fee payable on realized capital gains.