Niche Markets

Investing in certain collectibles can offer high returns  and add diversity to your portfolio.

Porsche 911 watercolor

A watercolor of a classic Porsche 911.

$1 million in the stock market (Dow Jones Industrial) 10 years ago would be worth about $1.6 million today. Not too shabby; your investments gained more than 60 percent.

But if a decade ago you had invested $1 million into certain, high-performing collectibles such as automobiles, that investment would be worth about $4.3 million. For example, a 1967 Ferrari 275 GTB/4 NART Spider and some of its classic cousins turned in a 430 percent return compared to a meager 60 percent return from the Blue Chip stocks. 

No one is suggesting you put all your eggs in one collectibles basket but certain collectibles—rare, always in high-demand—can enhance any diversified portfolio when it comes to your average return on investment.

To be sure, investing in collectibles can be challenging. But, just like the historical data of a stock’s performance may give you an idea of its future earnings, you can use historical analysis, such as that provided by the Knight Frank Luxury Investment Index (KFLII), to chart which collectibles markets have delivered the highest returns over time, returns that often leave stock market gains in the proverbial ‘dust.’

Several collectible categories show they can perpetually please the eye, pump up your portfolio, and provide stellar returns:

Classic Cars

With returns averaging 430 percent, a stable of classic automobiles can enhance your bottom line. Among the highest-returning brands—Porsche and Ferrari—which returned 24.2 percent and 9.7 percent respectively in a nine-month period ending in September 2014.

Art

Some collect art for art’s sake; good for them. Some collect art for its beauty; bravo. Some collect art because it’s a great investment, putting up an average return of 255 percent over the past 10 years.

When looking at art for investment purposes, not all art is alike. Consider these genre-specific returns from the past decade:

  • Old Masters (such as Rembrandt, Vermeer, Da Vinci): 153% 
  • 19th Century European Art (such as Bouguereau,Courbet, Eakins): 176% 
  • European Impressionists (such as Renoir, Degas, Monet): 274% 
  • Modern Art (such as Picasso, Chagall, O’Keefe): 286% 
  • Contemporary Art (such as Freud, Hockney, Johns): 233%