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The Investec Research Team review collectable real assets

From cars to wine, the Investec Research Team takes a look at the key opportunities for investment in the collectable real asset sector.

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Topic: Investing

Our Research Team have been looking into the increasing interest being shown in real assets called ‘collectables’. Thanks to low interest rates, an increase in wealthy individuals, and the strong returns collectables offer, this sector has seen good growth, and is becoming increasingly accessible to all investors. From wine to stamps, here’s a flavour of the kinds of collectables people are investing in. All figures quoted are based on a 10 year return up to Dec 2014.*

Cars – As you might imagine, one of the strongest returns in the sector was achieved from classic cars, with the highest recorded returns at 487%. Some of the world’s rarest and most desirable cars fetch staggering sums of money, such as the 1962 Ferrari 250 GTO Berlinetta that sold for US$38m in 2014.

Stamps – These little paper squares might not deliver quite such high returns as cars, but at nearly 200% this collectable item is still an attractive option. The only British Guiana 1856 1c black on magenta stamp in existence saw the hammer fall only when the bids hit $9.5m in June 2015.

Art – This collectable has long been a favourite of the wealthier investor, and recent years have seen its popularity maintained. In their 2014 Art & Finance report, Deloitte Luxembourg and market research firm ArtTactic found that 76% of art buyers were doing so for investment purposes rather than their love of a painted canvas. Exposure to the market is most accessible through art investment funds, where returns are sought through acquiring and selling mostly high-end pieces.

Wine – The Far East are at the forefront of a surge for this collectable, with a 10-year return of 234% in 2014. However, one of the biggest risks of wine investing is counterfeits. A US billionaire paid $312,000 for 4 bottles which allegedly belonged to President Thomas Jefferson, but were in fact fakes. The story attracted such publicity that it’s been turned into a soon-to-be-released film, aptly titled The Billionaire’s Vinegar.

To summarise, it’s fair to say that collectables generally represent investments where value can move rapidly, reflecting changes in taste. More often than not, the true value only becomes apparent at the point of sale.

*Source: Knight Frank, Bloomberg

This review has been issued by Investec Click & Invest Limited based on information from the Research Team of Investec Wealth & Investment Limited on the basis of publicly available information, internally developed opinions and other sources believed to be reliable. All views and recommendations expressed are based entirely on such data. Our material is regarded as non-independent research and a marketing communication which means that it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

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