Investing in Collectibles

This study focuses on investing in collectibles. We will investigate the benefits of investing in collectibles in several ways. Correlations with traditional asset classes are computed to look for diversification opportunities and possible hedging purposes. Ex ante MV optimal portfolios are constructed to see whether collectibles can improve the efficiency of a mixed asset portfolio. Last, cross asset correlations in different periods are investigated to see how collectibles behave in both a stable and a crisis period. Various indices are used as proxies for different asset classes. The total dataset contains 25 years of monthly prices. We conclude that collectibles inhibit financial characteristics that can be beneficial for investors in various ways. Diversifying and hedging risk, and good performance during recession are the most valuable. We found no proof for collectibles contributing to the efficiency of a globally diversified mixed asset portfolio. Major differences are found within the asset class collectibles.