For most, the word ‘exotic’ conjures up images of tropical islands adorned with sandy beaches and coconut trees. The dictionary defines it as “alien: being or from or characteristic of another place or part of the world” or “strikingly strange or unusual.” Besides qualifying foreign cuisines or pristine beaches, the word ‘exotic’ is increasingly used in the world of financial investments. In their search for the perfect asset classes that might beat market interests by a comfortable margin and diversify risks, financiers around the world have started looking into ‘exotic’ assets whether wine, art, coins, photography or antiquities, around which they develop structured products. “Exotic asset classes, such as art and fine wine, need to be approached with caution due to the specialist nature of these assets and the risk they present to naïve investors from fraud and sharp practitioners,” underlined Duncan Hughes, of Arch Fund. “However, one of the
