Collectibles offer a store of value for future generationsPublished on 11 Dec 2020
Art: a passion that also offers wealth preservation- Tiffany de Waynecourt-Steele
A recent global wealth report by Credit Suisse found that one of the main reasons people invest in collectibles is asset diversification. While real estate remains the biggest non-bankable asset, “collectibles add an extra dimension to a portfolio”, art lawyer, Tiffany de Waynecourt-Steele told guests at the latest webinar hosted by Stonehage Fleming and STEP Cape Town.
“The biggest share of annual sales is claimed by fine art, but watches, jewellery, classic cars, luxury handbags and wine are also popular investments,” she said. “And in times of turbulence, they can provide both a haven and an asset that offers compelling returns.”
The report also showed that 44% of ultra-high net worth individuals allocate 2-5% of their global wealth to collectibles, such as fine art or watches, while 31% allocate over 5%. “One of the key reasons is asset diversification but pure passion is also a strong motivator,” Tiffany said. “Collections are more often than not driven by the tastes and interests of the individual rather than by profit”.
Contemporary art offers annualised returns of 9.4%, with impressionist and modern collections not far behind on 8.9%, according to Credit Suisse.
Philanthropy also plays a significant role in motivating people to invest in collectibles, Tiffany said. “Some take pleasure in sharing their private collections or have a desire to create a legacy for the wider public”.
Whatever the motivation for allocating a share of their wealth to collectibles, many consider them to be a secure reserve of wealth for future generations, according to Tiffany. Covid-19 has disrupted the art market but many participants have adjusted their offering she said. “Despite today’s challenging circumstances, auction houses and galleries have adapted and embraced online platforms and we continue to see a new cohort of collectors coming through”.
Tiffany de Waynecourt-Steele is a UK Solicitor and South African Barrister based in Geneva, Switzerland. Her law practice is focused on the intersection of Private Client Law, Art Law and Disputes. Read more.