‘Treasure assets’ proving increasingly popular investment

Wealthy investors are increasingly favouring so-called ‘treasure assets’ when it comes to opting for financial vehicles in which to place their money.

As well as having a sense of nostalgia, this asset class – which includes collectibles such as historic cars, books, figurines and music memorabilia – also carries a strong emotional pull. It is however the status and cachet of owning such items that really sets them apart from many other more traditional investments.

Collectibles may not yield the highest financial returns, but across all wealth levels they are a popular investment, according to Spectrem Group’s latest wealth segment studies. The organisation, which publishes a range of market reports covering the affluent and retirement markets, found that collectibles are of huge interest to those making up the ‘mass affluent’, ‘millionaire’ and ‘ultra-high net worth’ investment sectors.

Indeed, the group’s latest report, called Asset Allocation, Portfolios and Primary Providers’ found that 14 per cent of mass affluent investors with a net worth of between $100,000 and $1 million before their primary home is taken into account, were invested in collectibles. The report also found that the same was true of 18 per cent of millionaires – those with a net worth of up to $5 million – and 20 per cent of ultra-high net worth investors – those who have a net worth of up to $25 million.

The average value of collectible investments was found to be around $21,000 for mass affluent investors, $38,000 for those in the millionaire camp and $181,000 for those falling into the ultra-high net worth investment bracket.

These treasure assets are attractive to investors because they are driven by a passion for a certain item – for example, historic music memorabilia is one of the most popular sectors. Former Beatle Ringo Starr’s memorabilia sold for record amounts at a recent auction, with more than $2 million being spent on his Ludwig drum kit from 1963 and $790,000 for Ringo’s own copy of the famous ‘White Album’.

Other collectibles, such as wine, also float the boat of many a wealth investor – last year, a Hong Kong based auction saw the highest price ever achieved for a lot of wine when 114 bottles of Romanee-Conti Burgundy made between 1992 and 2010 sold for $1.6 million.

Few other investments can purport to be driven purely by passion for an item; rather they are often decisions made with more practical reasons in mind. However, these treasure assets can also fetch large sums when sold – which is clearly a pull to investors, too, especially in the face of any economic turbulence.

George H Walper Jr, president of Spectrem Group, said: “Given increased market volatility, affluent Investors are clearly more reluctant to invest in the stock market than they were a year ago, and significant numbers are unwilling to invest outside the US.”

In terms of the most popular collectible investment amongst these investors, currency or coins were owned by 27 per cent of non-millionaire investors, swiftly followed by pieces of art, with 15 per cent, and cars, with eight per cent invested in this asset class. Meanwhile, 25 per cent of those in the millionaire investor bracket opted for these collectibles. Those in the ultra-high net worth bracket were most likely to invest their funds into art, with 32 per cent choosing this creative option, which was followed by coins and currency, with 21 per cent.

Experts in the collectibles field advise those interested in such an asset class to be wary of counterfeiting, deal mark-ups and maintenance or storage costs that they may incur in order to ensure the upkeep of the item, be it cars or wine. A patient outlook is also required in order to see a rise in value, the experts say, adding that it is best to enter the field with a drive to collect something that truly makes one’s heart flutter.

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