The coronavirus pandemic has changed everything – even the markets. We’re still just over a decade on from the last global crash Covid-19 blindsided almost everyone (unless you’re a virologist…). What did that mean for your investments? And going forward, the need to secure your financial position is more important than ever. There are new opportunities to consider; they’re picking up momentum, while more traditional investments have proved challenging, at times, since the start of 2020. Is this the time, then, to cast your net wider than before take a closer look at the world of alternative investments? Far from fragile commodities, alternative investments often exist free of market ties, are valued for their inherent value to the world around them can count on some robust performances where other assets have dipped.
Knight Frank Wealth Report 2021
The Knight Frank Wealth Report 2021 makes interesting reading, showing a shift in property investment trends from commercial developments to private residential homes, with access to the great outdoors the primary driver. However, things are changing with a focus on investment in life sciences technology at the fore. Cryptocurrency, cited by some as the alternative to gold, is still volatile shows no signs of levelling out in the next few years.
The Best Alternative Investments
While alternative investments include private equity venture capital, hedge funds managed futures, the world of luxury goods is proving to be resilient in the face of a pandemic. The Wealth Report notes luxury assets attracting an increase in value, with handbags enjoying a rise of 17%, fine wine 13% classic cars going up in value by 6%.
Luxury goods have humanity at the core of their value; it may be an artist, or skilled artisans that work hard to handcraft many of the assets, such as handbags watches. This is often underpinned by a brand reputation. LVMH Moet Hennessy Louis Vuitton, home to wine producing brands Chateau D’Yquem Chateau Cheval Blanc watch brands that include Hublot, Bulgari TAG Heuer, has outperformed the S&P 500 in the run up to 2020, as has Ferrari.
Art has always been a viable alternative to conventional investments because its value is a matter of perception, which is not linked to stocks commodities so not tied to the markets’ movements. What this means for art investment is that it frequently remains unaffected by global economic conditions. However, the value of any artwork is closely aligned with the value of other pieces by the same artist which can positively impact your investment. Demand can increase – has done with the rise in ultra-high net worth individuals who have been actively seeking alternative ways in which they can store their wealth.
Rather than buy an iconic piece outright, you could use a service, such as Masterworks, that enables investors to own shares in classic artworks also sell shares on.
Fine Wine Investment
Fine wine investment matures at the same rate as fine wine – slowly. However, both the return the resilience can be considerable; at the start of the pandemic in the UK, the Standard & Poor (S&P) 500 dropped 25%, while the wine index, the Liv-Ex 100, dipped by just 4%. Going back further to the 2007/8 recession, Liv-Ex dropped by less than 1% (0.6%) while the S&P plummeted by a massive 38.5%.
Fine wine is a useful inclusion in any portfolio where diversification plays a part. At the end of 2020, the Daily Telegraph reported an increase in fine wine prices, over the last decade, of over 200%. In the US, fine wine investments show a steady return of 10%-15%, which is on a par with US farmland which has an average per annum return of 11.5%, since 1991 (according to the USDA).
What makes fine wine all the more compelling as an investment is that it is an asset in a constant state of decrease. With every bottle open drunk, the price of the remaining bottles climbs in value.
Luxury, high-end watches can fetch outlandish amounts at auction. Consider the stainless steel Patek Philippe 1953 that secured $11m at auction in 2016, or Paul Newman’s Daytona Rolex that went for an astounding $17.8m in 2017.
While it is unlikely that you might have a watch that can fetch these prices right now, it is possible that certain high-end watches purchased now can be resold at an increased value in the future. What pushes prices for watches ever-upwards is to be found in the craftsmanship design, in the materials used brand reputation, however, when it comes to supply demand – especially with Rolex – demand will always outstrip supply. Production numbers are tightly controlled the waiting list is long. This also fuels the preowned market.
At Suttons and Robertsons, we have experts that excel in many of the alternative asset markets, whether that be a watch, a work of art or a classic car. If you have a luxury asset that you would like to release funds from, simply walk in or make an appointment we can have a valuation loan offer with you in 24 hours.
If you are looking for “pawnbrokers watches for sale”? You can shop all our pre-owned watches online.