Art and other alternate assets hold their appeal

As a flurry of cash continues to leave traditional investment avenues in the flight to shores of safety, several alternative asset classes like works of art, antiques, fine wines, diamonds etc have started to attract likely investors. Although investment stems mostly from high net worth individuals (HNIs), institutions are also taking equal interest.

With the looming spectre of inflation coupled with falling demand, these unconventional assets are being seen favorably. Investors believe that these assets have several benefits. Not only are they physical in nature but also are able to offer a diversified exposure away from the traditional fixed income avenue.

A recent news report by Yasmine Chinwala and Liam Tarry reveals how more and more investors are delving into luxury assets to beat inflation. The managing director (Emotional Assets Management & Research), Bernard Duffy, has been quoted as saying:

“Investors across the world have increasingly been turning towards more alternative assets since the credit crunch because these are tangible assets that hold their value well. This trend will be reinforced and will accelerate further when inflation kicks in with a vengeance in the coming years.”

The report appearing at efinancialnews affirms the trend with this year’s auction sale of legendary artist Picasso’s painting that has managed to fetch over £70m. A senior art adviser associated with Castlestone Management, Constanze Kubern, mentioned that even in today’s uncertain economic environment, museum-quality post-war art has increased in demand as well as in value.

The trend is observed especially in artists whose names are etched in art history owing to their lifetime achievements. Kubern underlined to their strategy of sticking to modern/post-war art. However, returns are still below the heady years of 2006-07. They are more difficult to measure since auction prices don’t take into account the art sold privately for undisclosed sums.

To read the full report, click To read about the different alternate asset classes likely to do well in the next few years, click here:
http://www.efinancialnews.com/story/2010-06-21/investors-delve-into-luxury-assets-to-beat-inflation