ASSETS WITH ATTITUDE

From Vroom to Vintage - the glam and distinctly risky side of alternative Investments

Bitcoin sank below $65,000 lasy week for the first time since 2024, wiping out all of the gains it had made since Donald Trump was elected to his second term as US president. The S&P 500 benchmark index has shed nearly 3% from its high earlier this year. The tech company led Nasdaq, is down by 6 per cent from its high of this year so. And gold prices plunged as the nomination of Kevin Warsh as Federal Reserve chair burst a staggering rise in the metals price.

There is still plenty of profit in many of these and other assets, if you pick your timescale judicially, but it has certainly given investors some pause for thought.

So, enter stage right – so called alternative investments. In a world in which the ultra-wealthy are still buying art, classic cars and fine wines – how about these assets as investments?

The Knight Frank Luxury Investment Index has been tracking the value of the prized possessions of the ultra high worth individuals, and here is what it has found.

Q: What are the general patterns which have emerged?

Research for KFIII claims that nearly 40% of the world’s wealthy reside in the US. No other country is as successful at creating homegrown wealth or attracting migrant Ultra High Net Worth Individuals. For luxury homes, private jets and superyachts, what happens in the US shapes global markets.

Africa is emerging as a growth hub for wealth creation, with an increasing number of individuals joining the US$10 million-plus wealth club. Although North America and Asia remain central to global affluence, Africa’s young population, rich natural resources and improving infrastructure position it as a future leader in wealth generation.

Q: Has luxury bucked the recent trend?

One way of measuring this is to use a luxury index. Each year, the KFLII tracks a weighted basket of 10 luxury collectables: handbags, jewellery, coins, watches, cars, colour diamonds, furniture, whisky, wine, and art. 

The KFLII fell by 3.3% in Q4 2024, the third time in the KFLII’s history that luxury collectibles have shown a downward trajectory.

However, despite this fall across two consecutive years, the KFLII has provided positive returns, with an overall increase of 21.4% over the past five years and a 72.6% increase over the past decade.  That doesn’t match the performance of the FTSE 100 which has risen by 60% over the past 5 years

In monetary terms, a US$1 million investment in 2005 would now be worth $5.4 million. As the 2025 KFLII report notes, luxury collectors invest for the long haul and primarily for the joy of ownership.

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The best-performing luxury collectible was handbags, with a growth of 2.8%, while cars showed the smallest growth at just 1.2%. However, this growth is modest, especially considering the global inflation rate was 5.8%, according to the International Monetary Fund. At the other end of the spectrum, art was the poorest performing luxury collectible, down 18.3%. 

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Q: So looking at the kind of luxury goods can be thought of as investments by the very rich, how about fine wines?

According to the Knight Frank Luxury Index here are the returns of some of the more high profile luxury goods.

Wine

1 year: 9.1%

5 year: +8.3%

10 year: +37.4%

The sometimes held view of wine – is that is a win-win. If the price goes up and if it goes down, you can drink a nice wine. While literally true, this of course does not make it a great investment, but it does make the downside more enjoyable perhaps than many other forms of investing.

Like all luxury assets, it is hard to invest in wine. However, there are limited pooled wine investment funds which are similar to pooled investment funds for shares but ironically the wine fund is not as liquid as the share market. Like this whole asset class it is hard to invest and sell and there is a high cost of storage, so none of these assets are usually invested by anyone other than those with money to lose and are thought of as sophisticated investors.

Tom Gearing, chief executive and founder of Cult Wines with £275 million Assets under management, told TheBuyer.Net: “Fine wine investing is not for everyone and I’m not sure as an industry anyone can claim they have a product ideally set up for retail investors right now. Building a fine wine portfolio is for those who are looking to diversify their wealth and starting at £25,000-£50,000.”

To help improve transparency of prices, an exchange was establishment called  Liv-ex(London International Vintners Exchange). It was created in 2000 by two stockbrokers- James Miles and Justin Gibbs - with the vision of making the fine wine world more transparent, efficient and safe.

Having surged prior to 2023, a number of top-tier Burgundies have undergone relatively big price corrections in a subsequent secondary market downturn. According to Decanter magazine there was a feeling among some merchants that patient bidders hold a strong hand. Bordeaux Index’s Carter said that, beyond a small group of blue-chip producers, Burgundy ‘remains a very fragile market’.

The most expensive wine sold in 2024 was a 1978 Domaine Henri Jayer Richebourg Magnum, which fetched just over US$130,000 at an online auction.

Q: What about the very top end of the luxury handbag market?

Handbags

The best-performing luxury collectible was handbags.

1 year: + 2.8%

5-year:  +34%

10-year: +85.5%

According to British Vogue the Gucci Jackie handbag is the true icon. It says that few bags can claim the cultural legacy of the Gucci Jackie. First introduced in the 1960s as the Constance, the bag was later renamed after Jackie Kennedy, who famously carried it throughout her lifetime.

It costs around £2,820

If you are thinking of the future, Vogue says the future heirloom is The Row Margaux. It says it has secured its place in the fashion hall of fame, thanks to its immaculately-crafted, pared-back creations. The brand’s Margaux has become a cult item – and signifier of quiet luxury – which has been in and out of stock since its release. It costs £4,086 on ebay.

The big mamma of all handbags is the Hermès Birkin? Created in 1984, the bag was named after fashion icon and actor Jane Birkin, who, after finding herself sitting next to Jean-Louis Dumas, CEO of Hermès, on a flight, famously sketched the design on a sick bag. The rest, as they say, is history. Notoriously hard to get hold of, it can take years on waiting lists to get your hands on a new one, but pre-loved versions can be found on multiple resale sites. This is a purchase that will last a lifetime – and then some. Vogue list the price at £16,500 but cash alone may not buy you one – serious strings may have to be pulled.

The most expensive handbag sold at auction in 2024 was a Hermès Kelly 25 Himalaya with Diamond Hardware. This specific bag features 18K white gold hardware adorned with 298 diamonds, totalling 3.50 carats. The clasp alone holds 2.10 carats (40 diamonds), and the padlock features 1.40 carats. It was sold by the auction house Sotheby’s for $330,000.

Q: And what about classic cars?

Classic Cars

1 year: +1.2%

5-year: +29.5%

10-year: +58.9%

According to industry guide Hagerty, 2025 has, in general, been an extension of what Hagerty saw in late 2024. The boom times of the post-Covid era are now firmly over, buyers are being much more careful with their money and, as a consequence, nearly 80 percent of values have either dropped or remained static. That said, delve a little deeper and certain areas emerge as hotspots, both up and down.

The Shelby Cobra Daytona coupe showed the largest value increase of any car in the Guide, You might remember a Shelby car was the main feature in the film ‘Ford v Ferrari’ with Matt Damon as the car designer Carroll Shelby.

In August, Sotheby’s auctioned a 1960 Ferrari 250GT SWB California Spyder by Scaglietti. The classic car, offered for the first time for sale publicly, fetched $ 17 million.

Cars, especially pre-owned classic and vintage models, have shown steady returns over the past decade and are proving a popular portfolio diversification, with sales of collectable cars accelerating at an unprecedented pace, notes the 2025 Luxury Investment Index report.  Those with a racing pedigree, exceptional design and engineering, or a link to pop culture have achieved record-breaking results at auction. 

Q: How about jewellery?

Jewellery

1 year: +2.3%

5-year: +20.2%

10-year: +33.5%

In November 2024, a striking historical diamond necklace linked to the French queen Marie Antoinette sold at Sotheby’s in Geneva for $4.8 million, double the estimated amount. The Georgian piece contains around 500 diamonds.

While rising modestly in 2024, jewellery remains a reliable luxury collectible investment, especially rare items with historical provenance or from prestigious brands like Van Cleef & Arpels, Cartier, Tiffany & Co., and Boodles.

Q: What about coins?

Coins

1 Year: +2.1%

5-year: +23.6%

10-year: +47.5%

A gold Brutus coin, which was struck between the chaotic years after Julius Caesar’s murder in March 44 BC and the Battle of Philippi in October 42 BC, sold for more than $ 2 million. Only 17 of these coins are known to have survived. 

Q: What about whisky?

1 year:  – 9%

5 year: -9.9%

10 year: +191.7%

A 30-year-old bottle of The Emerald Isle, from The Craft Irish Whiskey Co., became the world’s most expensive bottle of whisky when it sold for $2.8 million in early 2024, just surpassing a previous record-breaking sale of a bottle of The Macallan 1926. The Emerald Isle is the rarest triple-distilled single malt in existence.

In General:  

However fun the idea of investing in any of these, it is probably something most people should stay away from unless you really know the subject and have money to both tie up for long periods and perhaps lose.

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