Lego - The Toy of Smart Investors

Posted: 17 Sep 2020

See all articles by Victoria Dobrynskaya

Victoria Dobrynskaya

National Research University Higher School of Economics

Julia Kishilova

RB Partners; Independent

Multiple version iconThere are 2 versions of this paper

Date Written: September 16, 2020

Abstract

We study financial returns on alternative collectible investment assets – toys - using LEGO sets as an example. Such iconic toys with diminishing over time supply and high collectable values appear to yield high returns on the secondary market. We find that LEGO investments outperform large stocks, bonds, gold and other alternative investments, yielding the average return of at least 11% (8% in real terms) in the sample period 1987-2015. LEGO returns are not exposed to market, value, momentum and volatility risk factors, but have an almost unit exposure to the size factor. A positive multifactor alpha of 4-5%, a Sharpe ratio of 0.4, a positive return skewness and a low exposure to standard risk factors make the LEGO toy and other similar collectibles an attractive alternative investment with a good diversification potential.

Keywords: alternative investments, collectible assets, emotional assets, LEGO, portfolio diversification

JEL Classification: D14, G12, G15

Suggested Citation

Dobrynskaya, Victoria and Kishilova, Julia, Lego - The Toy of Smart Investors (September 16, 2020). Higher School of Economics Research Paper No. WP BRP 80/FE/2020, Available at SSRN: https://ssrn.com/abstract=3693843

Victoria Dobrynskaya (Contact Author)

National Research University Higher School of Economics ( email )

26, Shabolovka st.
Moscow, 119017
Russia

HOME PAGE: http://www.hse.ru

Julia Kishilova

RB Partners ( email )

Smolenskiy Blvd., 40/2
Moscow, 119034
Russia

Independent ( email )

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