Practical Applications of When Rationality Meets Passion: On the Financial Performance of Collectibles

Practical Applications Summary

In When Rationality Meets Passion: On the Financial Performance of Collectibles, published in the Fall 2018 issue of The Journal of Alternative Investments, authors Philippe Masset and Jean-Philippe Weisskopf, both associate professors at École hôtelière de Lausanne in Lausanne, Switzerland, evaluate the investment performance of collectibles such as visual art, fine wine, and classic cars over an 18-year period. They conclude that buying collectibles has some benefit as a form of portfolio diversification. However, when the illiquidity of collectibles is taken into account, most fail to meaningfully outperform. In addition, the high cost and complexity of investing in collectibles places them beyond the reach of all but the wealthiest investors.

TOPICS: Real assets/alternative investments/private equity, portfolio construction, performance measurement