Now here’s another diamond investment fund – this one’s using South African icon Nelson Mandela’s name to try and spark investor interest. According to this report on allAfrica.com, Sirius Investment Management, registered in Guernsey in the Channel Islands, has bought the ‘Madiba Diamond’, so named after Nelson Mandela. Here’s what the report has to say about the stone:

It is a rare, 24-carat black diamond cut from a 76-carat piece of rough found in Kimberley in 1985. The stone got its name in 1996 after owner Len Sacke showed it to a visiting President Mandela and asked permission to name it after him.

Sirius partner David Linsley says the stone is the first of a collection of such large and special stones that the fund will be based on. The goes on to quote Martin Rapaport as saying that such stones are ‘equal to Ferraris and Rolls-Royces in the car industry.’ While previous large-diamond-based funds have had embarrassing histories – Diamond Circle trumpeted a $400 million fund and wound up listing a $75 million version. Whether or not it will make money remains to be seen.

Meanwhile, Linsley claims the Sirius fund will have an annual return of between 15- and 20 per cent! He also claims that his fund will turn in this stellar performance because it is based on ‘a structural change in wealth redistribution to the world’s growing economies to buoy up demand for top-end stones.’ The report says:

He is betting on rising wealth in countries such as China, India and Russia to support growth in demand for these top-end diamonds.

Huh? How does the redistribution of wealth change anything? The previous diamond funds didn’t get off to great starts because of serious investor concerns. Is Sirius banking on Chinese, Indian and Russian investors not being aware of these issues? Also, given the collapse of a number of hedge funds and the financial embarrassments of some of the world’s biggest banks, do you really think people will plonk money in schemes like these?

I personally doubt it. But watch the diamond investment fund space carefully. It could surprise or entertain you.