Alternative asset classes, the joy of collectibles MILLWOOD KANE INTERNATIONAL
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The political turmoil of the past years and resulting market volatility, directed investor’s attention on alternative asset class investments. Passion play into luxury assets, has gained high momentum in recent years, as ultra-high net-worth individuals seek enjoyment, as well as returns on their investments, that may amount to triple digits. Other considerations when buying these assets are safety of the investment, the portfolio diversification and status amongst peers.

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In a 2017 auction by Christies, after the sale of Salvator Mundi by Leonardo da Vinci, the world’s attention became focused on the art market, a Middle Eastern investor bought the painting for US$450.3 million and brought further appetite to buyers to invest in art for their personal collection. This trend continued throughout 2017, competing against the more traditional luxury investments, of classic cars and wine collections.

Classic cars are still the best performing assets over a longer time span, capable of a threefold appreciation over a 10-year period, according to the Knight Frank Luxury Investment Index. The top seller was a 1956 Aston Martin DBR1, raced by Stirling Moss, auctioned for US$22.5 million.

On the classic end of the luxury spectrum, jewellery auction sales in 2017 between Christie’s and Sotheby’s auction houses came to a total of US$1.1 billion. Chinese jeweller Chow Tai Fook paid a record price of US$71 million for the Pink Star a 59.6 carat pink diamond, the world’s most expensive gemstone, breaking the record previously held by the Oppenheimer Blue diamond.

Collections are an extension of their owners, an expression of who they are. Alongside art, wine was enjoying a bull run in 2017. On the racks of some of the most exclusive wine collections in the world, some hosting from 4000 to 2 million bottles, are found wines of the likes of the Chateau Margaux 1787 sold for €191,000 and “billionaire’s vinegar” Château Lafite 1787 sold for €132,000 in auction.

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Alternative Investment in collectibles offers wider choices to investors who wish to combine an area of their expertise with the joy of ownership and a high upside potential. A great attraction point of alternatives is their ability to produce a steady stream of income with lower risk, in addition, investors get more access to high calibre manager strategies and can liquify the assets easily. Alternatives’ behaviour in a portfolio- being very different to that of traditional forms of investment- offers investors greater scope for diversification to manage various type of market uncertainty.

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