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

See all articles by Elroy Dimson

Elroy Dimson

University of Cambridge - Judge Business School; London Business School

Christophe Spaenjers

HEC Paris - Finance Department

Date Written: September 2, 2013

Abstract

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

Dimson, Elroy and Spaenjers, Christophe, The Investment Performance of Art and Other Collectibles (September 2, 2013). Chapter 10 of Anna Dempster (Ed), Risk and Uncertainty in the Art World, Bloomsbury Publishing, 2014, pages 219–238. Available at SSRN: https://ssrn.com/abstract=2319338 or http://dx.doi.org/10.2139/ssrn.2319338

Elroy Dimson

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 700 607 7390 (Fax)

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
44 20 7000 7000 (Phone)
44 700 607 7390 (Fax)

Christophe Spaenjers (Contact Author)

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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