Collectibles as Investments Article:

[dam60]

FYI

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Alternatives Where Pleasure Equals Profit

By Neil Keane

Of DOW JONES NEWSWIRES

LONDON -- Twelve thousand pounds for a flatbed truck sounds like a good deal -- but it's a shock price tag for a two-inch Dinky toy.

 

It's not such a surprise, though, when you compare the performance in recent years of alternative investments such as collectable toys and works of art to stocks and bonds.

 

Pleasure of ownership may have been the original motivation for such investments, but they're now producing impressive returns, which is attracting the attention of professional and institutional investors keen to diversify out of underperforming financial markets.

 

Dinky toys are miniature models of cars, trucks and buses. They're no longer produced but were a staple part of every British schoolchild's toy box for generations.

 

Now they're much sought after by collectors and investors looking for consistent growth.

 

The Dinky toy market has been appreciating by 10%-15% per annum for the last five years while newer makes of toys have increased by 300%-400% over the last ten years.

 

A set of 20 Star Wars figures fetched GBP10,000 at auction earlier this year while some train sets have gone for over GBP110,000.

 

In April a 1950s Dinky Folden flat truck was sold for a world record GBP12,000. When new, and adjusted for today's prices, it would have cost just GBP15.

 

Vectis, a specialist toy auctioneer based in Stockton-on-Tees in the north of England, sold the item.

 

"It's a nostalgia thing, and toy values have risen dramatically in the last few years so people are now viewing them as an investment," says Bryan Goodall, owner and managing director of the firm, which achieved sales of GBP6 million this year.

 

Goodall says investors are starting to look at collectable toys as an important diversification tool.

 

"I don't think there's a correlation (with the economic cycle) at all. We've seen steady double-digit growth and the market rose by 15% after 9/11."

 

He has investors who spend between GBP1,000 and GBP10,000 a month. One client, a fund manager, spends GBP100,000 a year on his own collection.

 

"We're regularly spending GBP25,000 a month for one particular investor," adds Goodall.

 

Art For Art's Sake

Pleasure is the first principle, says leading art dealer Acoris Andipa, director of The Andipa Gallery in London.

 

Choosing works of art is "about investing in something you enjoy that holds its value -- there are very few problems with depreciation in the markets we work in," says Andipa, whose family firm has been specializing in fine art for over 400 years.

 

Andipa manages a number of funds for individuals and private trusts, focussing on modern and contemporary art and old master drawings.

 

The gallery's private fund, valued in the "low millions" of pounds, has returned a spectacular 33.8% per annum over the last five years. Its biggest customer has invested GBP1 million while others hold tranches of GBP250,000. The minimum investment is GBP100,000 and Andipa puts his private clients" total worth at GBP12 billion.

 

The clients are "individual rather than institutional," he says, though he has noticed a change in approach over the last two years, with some buyers placing diversification benefits before aesthetics.

 

Surprisingly Affordable

Belatedly, perhaps, institutions are waking up to the opportunities.

 

A "very big" accountancy firm recently approached the gallery with a view to injecting GBP10 million into one of its funds, but Andipa turned them down.

 

"There's only so much art a private gallery can sell," he says. "If we'd brought more money in, we wouldn't be able to uphold a 33.8% return."

 

Despite the high GBP100,000 cost of entry into the private fund, Andipa points out that original works of art are surprisingly within reach of most individuals.

 

A signed Pablo Picasso etching, for example, will fetch GBP4,500. In pop art, which has enjoyed a mini-boom recently, an Andy Warhol engraving can be had for GBP5,500.

 

The portfolio of the future, it seems, will need to be not only well balanced but eclectic. Alongside stocks, bonds and property, how about an Andy Warhol print, a Darth Vader action figure or a little Dinky Range outside-affiliatelinksnotallowed?

 

-By Neil Keane; Dow Jones Newswires; +44 20 7842 9495; neil.keane@dowjones.com

[BronzeBruce13]

Nooooooooo.... not more on this topic

[joe_collector]

 

Anybody hear anything?

[OldGuy]

If a market crashes and no one is there to hear it does it make a sound?

[aardvark88]

This is the 4th sign of the apocalypse when business articles start espousing the virtues of collectibles as sure-fire investments to the general public. At least, they also mention u should love what u are collecting/investing in as the Dinky toy has virtually no intrinsic value. Same goes with most paper collectibles unfortunately.

[drbanner]

If a market crashes and no one is there to hear it does it make a sound?

 

[lighthouse]

This is the 4th sign of the apocalypse when business articles start espousing the virtues of collectibles as sure-fire investments to the general public. At least, they also mention u should love what u are collecting/investing in as the Dinky toy has virtually no intrinsic value. Same goes with most paper collectibles unfortunately.

 

But they've been doing just that for at least three decades... Not a month goes by where you don't have some hack writer doing a feature story on how to make money with collectibles...

 

That's a slower-moving apocalypse than Je Tu Il Elle...