Investment Collections: Where Profits and Passions Collide

JUNE 4, 2024

Investment collections continue to expand as an alternative asset class. From Pez dispensers to antique weapons, almost anything can be considered a financial asset. Collectors of non-traditional curations know what to purchase, when, and how to preserve the item until it is time to liquidate. So what investments are collectors currently accumulating?

Art

Art collecting is still one of the most popular investment collections. According to the Knight Frank Luxury Investment Index, art has been a top-performing collectible for the past decade. In 2023, art investments rose 30%.¹ After the pandemic began in 2020, the art investment class exceeded expectations and rebounded quickly.

NFTs, or non-fungible tokens, are one-of-a-kind digital assets that have recently gained popularity and generated significant value. NFTs prove the art market is adaptable to more modern, digital expression.   

Antique Furniture

Collectors of antique furniture can own a piece of history while potentially reaping financial rewards. When dealing with antiques, it is important to work with reputable sellers to ensure the provenance is authentic and the furniture has been ethically sourced. Rarity and high-quality craftsmanship can prove to be valuable in this space. In 2022, a folding chair from the Ming dynasty set a new world record after selling for $16.5 million at auction, making it the most expensive Chinese chair ever sold.² However, it still pales in comparison to the 18^th-century Florentine ebony chest inlaid with amethyst quartz, agate, lapis lazuli, and other stones, which sold for $36 million in 2004.³ Collectors appreciate that antiques can be a stylish and profitable investment.

Vintage Wine

The wine market has grown in the past few years and is predicted to keep expanding. For those investing in wine, they combine their passion for winemaking with the potential for significant financial returns. According to RareWine Invest, 2023 saw price corrections across their wine investment categories, leading to a decrease of 7.33%. Despite the decline, 1,333 positions were successfully sold, yielding an impressive average return of 46% for investors.⁴

Sneakers

Urban and street art are gaining in popularity. Nowhere is this better reflected than in the emergence of the sneaker market. Collaborations and limited-edition sneaker releases drive up demand and prices. In spring 2021, Sotheby's auctioned off a one-of-a-kind pair of Nike Air Yeezy prototypes that were debuted onstage by Kanye West at the 2008 Grammy Awards. The sneakers were the first-ever pair sold for more than a million dollars.⁵ The sneaker resale market in the U.S. is estimated to be around $2 billion⁶ and is growing significantly — proving to be an attractive collector’s item, especially with younger generations.

Sports Memorabilia

Sports enthusiasts are collecting everything from game-worn jerseys to autographed sports equipment. In 2022, Sotheby’s set two back-to-back records for game-used sports memorabilia. The first was the shirt worn by Diego Maradona during his infamous “hand of God” goal in the 1986 FIFA World Cup quarter-finals, which sold for $9.5 million. A few months later, a jersey worn by Michael Jordan during his “Last Dance” 1998 NBA finals sold for $10.3 million.⁷ The sports memorabilia market is expected to appreciate for the foreseeable future.

Luxury Handbags

It is not often that you will hear a collectible is recession-proof. However, experts say handbags are just that.⁸ In a 2022 report, global financial consulting company Credit Suisse named designer purses as one of the best collectible investments, surpassing both jewelry and art in resale value. According to analysts, the average value of handbags has increased by 92% in the last 10 years, whereas art increased by 84% and jewelry by 53%.⁹

Handbag market size is poised to grow from $52 billion in 2023 to $81.79 billion by 2031 — a compound annual growth rate of 5.8%. Handbags have recently risen in popularity as one of the most coveted personal items worldwide.¹⁰ Much of this growth has been attributed to designers Hermès and Chanel. Limited-edition or rare pieces can bring a nice return. The most expensive handbag ever sold at auction happened in 2021, when Christie’s broke a world record with a Hermès Himalaya crocodile Retourné Kelly 28. The piece, featuring 18-karat gold and diamond hardware, sold for $513,200.¹¹ This is an indication of the boom that the market is experiencing, with no signs of stopping anytime soon.

The Dark Side of Asset Collecting

The collectibles asset class is not regulated by a legal entity. Therefore, fraud is commonplace. Be cautious when making a purchase, do research beforehand, and work with a legitimate dealer whenever possible.

As collectibles are not traded in public markets, they are sold with substantial markups. When dealers and auction houses sell assets, they aim to make a sizeable profit. If an asset is being sold at a bargain price, it may be too good to be true.

After purchasing a collectible, it will need to be kept in a safe manner while it appreciates. Consider storage costs, which can range from an affordable protection case to a climate-controlled storage unit, before making the investment. Failing to properly store collectibles could substantially diminish the item’s value. Scuffs, scratches, and wear and tear bring down the value of the collectible during a sale and can reduce returns on the investment.