August 15, 2020

Can’t Afford a Birkin Bag or a Racehorse? You Can Invest in One

“In the beginning, it was like equity markets: just safe, blue-chip investments,” said Rob Petrozzo, a founder and the chief product officer at Rally Rd. “Over the past few months, we’ve seen with people being inside, they’ve gotten access to more information and they have been exploring the app more fully.”

He said existing investors on the platform had doubled the number of items they owned shares in. Initial offerings have sold out five times faster than before the pandemic, as new investors on the platform began buying up shares more quickly.

To accommodate growing interest, MyRacehorse, which sells shares in racehorses that are far smaller stakes than those sold by traditional racing syndicates, has partnered with a top stud farm, Spendthrift, to extend the length of the investments. Before, its model had been to sell the horse when it was done racing. Now, investors can participate in the breeding fees, which can be many times any racetrack winnings.

The fractional movement is not limited to luxury items. Fidelity, the mutual fund giant, offers “stocks by the slice” where you can buy a portion of a share starting at $1. And many private equity funds, which have high minimum investments and long lockup-periods, have created mutual fund versions of their funds.

Eugene Olmstead, a retired internet technology executive, said he had 1 percent to 1.5 percent in 11 horses, all bought through his self-directed individual retirement account.

“You’re not going to get a worthwhile return on your investment unless you have a certain percentage,” said Mr. Olmstead, 58. “I’ve done my research, and I’m investing in ones that I think in the long run will give me a decent return.”

Of the 11 horses he has bought shares in, only two are old enough to race. He said both had average winnings of $12,000 a race. He has received some dividends from those races, but said the money was not substantial yet.

Article source: https://www.nytimes.com/2020/07/31/your-money/birkin-bag-racehorse-invest.html

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