Starting an investment-grade collection
Advice for those looking to start a serious investment-grade collection but are unsure where to start
Paul Fraser Collectibles, Wednesday 4 July 2012
I have collected various items for fun in the past, but I'm looking to start investing in collectibles on a more serious level. I have a broad range of interests and I'm having trouble deciding which area to place my money with. Can you help? - Margaret, New York.
Hmmn, that's a tricky one… but I'll do my best.
A great collection of high-end, investment-grade collectibles relies on its owner to make the right choices and research each piece carefully, or at least, buy from a respected company that will do that research on your behalf, so I would urge you to make this your priority. Make sure you genuinely care about your chosen field, because if you don't, chances are your lack of enthusiasm will correspond to a less than fascinating collection.
Secondly, a strong collection doesn't have to focus on one specific market. It can be based around a theme that's important to you or from a particular period in history to combine various related artefacts. For example, we recently profiled the Siggi & Sissi Loch art collection, where all of the works were selected for their relevance to the colour blue, rather than being taken from a particular art school or movement.
Now, let's take a look at some of the areas you might consider...
The art market has enjoyed a considerable amount of success recently, boosted by zealous investors from China. The benchmark Mei Moses Art Index has beaten the S&P 500 in six of the last 10 years, boasting a current compound annual return of 7.3%, compared to S&P's meagre 6.2%.
Particularly strong is the Old Master and 19th Century index, which is up 5.4% in the first half of 2012 alone. This success was highlighted last night, when John Constable's The Lock sold for a record £22.4 ($35.2m) at Christie's. However, the art market can be quite temperamental and certain artists fall out of favour at the drop of a hat. This is a market that requires a keen eye (or a particularly knowledgeable wealth manager).
If you're looking for a safer bet, then my advice would be top-end stamps. Stamps have traditionally led the collectibles market, with returns of 9.5% pa over the last 50 years for the finest examples. And with more than 18m collectors and 50,000 philatelic societies worldwide, it's easy to find detailed information on rare stamps, so there's no need to feel intimidated by the vast selection there is to choose from.
But there's one reason in particular that I would promote stamp collecting - volatility (or lack thereof). In a recent comparison, it was revealed that the 100 leading investment-grade British stamps easily beat the Dow Jones Index, posting an annual volatility rating of 2.55% against Dow Jones' massive 15.66%. The SG100 also tops the 17.44% volatility posting for gold, despite gold posting higher annual returns over the same period.
Hopefully this will help you out, though I'm afraid I can't make the decision for you Margaret. We are, however, on hand if you would like to discuss your investment needs further. You can email firstname.lastname@example.org or call +44 (0) 117 933 9500.
Recent and related articles
· Risk vs Reward - the truth about stamp investment | 20 June 2012
· Bill Gross ASCAT Grand Prix stamp award | 8 June 2012
· MonacoPhil 2009 stamp exhibition | 8 June 2012
Guides and analysis