One in six UK investors hold collectible investments in their portfolios, a recent study by Lloyds Private Banking shows. Jewellery is the most popular alternative investment, followed by rare coins and antiques.
Collectibles are defined as being able to be touched and moved. They're characterised by limited supply, and their value depends on whether people want to own them.
When equity markets are sluggish and volatile and bond markets offer poor value, investors tend to turn to alternative investment opportunities. Some investors argue that collectibles can be used to diversify portfolios and protect against inflation.
In the Lloyds study, 500 UK retail investors with a minimum of £50,000 invested in traditional and/or alternative investments were interviewed. On average, they spent £13,500 on a single collectible investment, with one in 10 spending more than £50,000 on an individual item.
Investors in fine wine are expecting the strongest level of return in the long term (48 per cent) while they predict classic cars to perform better in the medium term at 41 per cent.
Classic cars came out on top as the most expensive choice, at an average of £34,500 per investment. This was followed closely by antiques at £32,500 and whisky at an average of £27,700.
Out of the 11 most expensive asset classes surveyed, racehorses attracted the lowest level of investment, at an average £15,000. However, one in four investors spends less than £1,000 on hobby investments.
Markus Stadlmann, chief investment officer at Lloyds Private Banking, says: 'Often tangible assets, such as a painting or a timepiece, retain their value and are not eroded by inflation.
'Over the long term, these types of assets do not closely correlate with more traditional equity and bond markets, and therefore offer diversification opportunities.'