Despite these challenges, researchers have managed to analyse returns in the collectibles market over a long period of time. Elroy Dimson of London Business School and Christophe Spanjaers of HEC Paris calculated returns on the UK art, stamp, and violin markets from 1900 to 2012.

These showed that UK art generated a real, annualised return of 2.4% (6.4% in nominal terms); stamps a real, annualised return of 2.8% (6.9% nominal); and violins 2.5% (6.5% nominal).

These returns lag the real, annualised return of 5.2% for equities, but beat returns on bonds (1.5%) and gold (1.1%) over the period, implying that art (and collectibles) is an asset class not to be sniffed at. However, there are a number of issues that need to be considered.

One is the issue of costs. As noted above, art is not a fungible asset, and as such this creates layers of costs, both disclosed and hidden. Galleries and auction houses can add substantial costs to buying and selling of works that are well in excess of those charged by brokers of shares or commodities, often more than 25% of the price.

Having said this, the effect of such costs diminishes with time, so investors in art pieces can be rewarded for a buy and hold strategy (as Warren Buffett once replied when asked his optimal holding period for an asset: “Forever!”).

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