Amid a significantly deteriorated 10-year economic outlook, investors and their financial advisors are thinking ‘outside the box’ as they look to put their capital to work. Many are turning to proven collectibles markets that have survived and thrived for centuries, according to an article by Merilee Kern, published in Impact Wealth magazine. Kern, MBA, a Forbes Business Council Member, brand analyst, strategist and futurist, names three alternative asset classes which have proved themselves as a safe haven for investors, namely fine wine, rare coins and classic cars.

Over the last 10 years these asset classes have demonstrated impressive value increases, with 120% growth for fine wine, 175% for rare coins, and 194% for classic cars (based on Knight Frank’s “The Wealth Report”), and they are just hitting their stride: “One should bear in mind that due to finite supply observed at the rare, high end of each market, even relatively small increases in global demand could send prices skyrocketing. So, it seems “sooner rather than later” is the perfect time to test these vehicles before any further seismic price shifts occur, and under the guidance of trusted experts while they still have capacity” Kern underscores.

While most of their peers are paying retail prices to consume or collect these trophies, savvy investors are working with trusted industry experts to purchase investment grade wines below their market value, the article says quoting Paul Hammond, Co-Founder of IG Wines: “Throughout the pandemic our clients have reallocated wealth to fine wine as a diversified investment, which is a relatively liquid tangible asset. From there it’s simple – we strive to buy opportunistically, we store the wine portfolio in bonded warehouses in a tax efficient structure, and ultimately, we make recommendations on optimal exits. Although production is generally high upon release for, say, a first growth Bordeaux wine, much of the elite wine is consumed over time, thus reducing the supply while maintaining a consistently strong global demand for the best vintages”.

The Liv-Ex 100, which has tracked the most sought-after wines in the secondary market since 2002, has increased 213% in value as of November 2020, with 6.63% annualized growth and low comparative volatility. Based on this steady track record, it might be worth considering this asset class for more than just one’s personal indulgence, adds M. Kern.