Investment experts are questioning the potential of a newly launched Bermuda-domiciled fund which will invest in rare stamps.

The Stanley Gibbons Rare Stamp Investment Fund launched on Friday and is managed on a full discretionary basis by Stanley Gibbons Limited, which has traded in stamps since 1856. It is part of The Stanley Gibbons Group Limited, which is quoted on AIM, the market operated by the London Stock Exchange.

Paul Fraser, chairman of The Stanley Gibbons Group Limited and a director of the Stanley Gibbons Rare Stamp Investment Fund, said that the launch of the fund would give both investment managers and individual investors the chance to benefit from the ?consistently high returns available from rare stamps through a unique collective investment scheme.?

?Stamps have a low correlation with other asset classes, providing investors with the opportunity to diversify their portfolios using the expertise of Stanley Gibbons, without the need for direct rare stamp ownership,? he said.

The company claims that rare stamps have historically been a good investment, giving an average return of ten percent per annum between the period 1907 and 1990.

However investment experts told The Financial Times they were sceptical about the company?s target return of ten percent.

Justin Urquhart Stewart, of Seven Investment Management, said that while stamps, wine or motorcycles might be hobbies where you can even make money, as a mainstream investment product, ?it?s unreliable, unregulated and frankly unnecessary for most people.?

?Stamps are perforated and it sounds like this investment will be too,? he told The Times.

Justin Modray of independent financial advisor Bestinvest told The Times that while the fund would provide diversification benefits, ?there are too many fees being charged.?

The minimum subscription is ?20,000. Subscription proceeds will be used to acquire and trade in stamps from around the world to generate double digit returns. At the end of the five year term the stamps are sold and the proceeds distributed to investors.

Besides taking a subscription fee, management fee and performance fee, Stanley Gibbons will also take an additional fee of Gibbons will also take an additional fee of five percent of any stamp bought at auction and three percent on stamps sold, which Mr. Modray said raised the risk of ?churn? - unnecessary trades to boost fees.

Stanley Gibbons however said at launch that current low interest rates, market forces of supply and demand, an increase in collectors from newly emerging economies such as Russia and India and the low inflation environment provide ?advantageous conditions? for investment in stamps. Veteran philatelic industry specialist Tony Banwell has been named the fund?s investment director while Rodney Birrell is a director.