The Investment Performance of Art and Other Collectibles
Chapter 10 of Anna Dempster (Ed), Risk and Uncertainty in the Art World, Bloomsbury Publishing, 2014, pages 219–238
19 Pages Posted: 2 Sep 2013 Last revised: 19 Mar 2016
Date Written: September 2, 2013
We assess the long-term financial returns from high-quality collectible real assets, and review the unique risks that are associated with such investments. Over the period 1900-2012, art, stamps, and musical instruments (violins) have appreciated at an average annual rate of 6.4%-6.9% in nominal terms, or 2.4%-2.8% in real terms. Despite the similarity in long-term returns, short-term trends can vary substantially across these different types of emotional assets. Collectibles have enjoyed higher average returns than government bonds, bills, and gold. However, it is important to recognize the quantitative importance of transaction costs in collectibles markets. In addition, price volatility is larger than is suggested by conventional measures of risk, and these assets are also exposed to fluctuating tastes and potential frauds. Yet, despite the large costs and many pitfalls, investment in emotional assets can pay off, because of the non-financial yield they provide.
Keywords: alternative investments, collectibles, luxury goods, price indexes, investment risks
JEL Classification: G11, Z11
Suggested Citation: Suggested Citation