Collectibles Report 2024 Part 2: Art & Car Markets

Introduction

According to Knight Frank's Wealth Report, art and luxury cars are one of the most resilient and popular alternative asset categories among UHNWI (ultra-high-net-worth individuals). 

In this blog we talk about those categories in details, providing not only performance data, but exclusive insights from our expert partners.

If you want to download and read the full Collectibles Report 2023/2024 in English, German or French, please click this link.

Art market

Art has long been a cornerstone of the alternative investment landscape, offering a unique blend of financial return potential and cultural significance. As an asset class, art is characterized by its resilience during economic fluctuations, often providing a stable store of wealth in times of market volatility. At Splint Invest, we recognize the enduring value of art and have partnered with leading industry experts to bring high-quality opportunities to our investors.

In this report, we are proud to highlight insights from two of our esteemed partners in the art world: Maddox and Artemundi. Both organizations bring decades of experience in art investment, specializing in established and blue-chip artists with proven market track records. Maddox is known for its expertise in contemporary and postwar art, while Artemundi has built a reputation for its deep knowledge of 20th-century masters and innovative approaches to art securitization. Together, these partners enable us to offer our investors access to carefully curated portfolios that reflect the best of what the art market has to offer.

Monthly Performance Comparison - Art

Over the 12-month period from June 2023 to June 2024, the performance of art offered on the Splint Invest platform showed a steady, albeit modest, increase compared to traditional financial indices like the Swiss Market Index (SMI) and the STOXX 50.

Comparative analysis:

• Stability: The art index shows a much more stable performance compared to both the SMI and STOXX 50, suggesting that art investments are less susceptible to the volatility that affects traditional financial markets.
• Volatility: While both the SMI and STOXX 50 experienced significant ups and downs throughout the year, art investments provided a more predictable return.
• Market Dynamics: The strong performance of the SMI in November 2023 and its subsequent volatility likely reflects specific economic or market events, which may not have impacted the art market to the same extent.

Possible explanations:

• The relative stability of art compared to stocks may reflect its status as a tangible asset, often seen as a safe haven during times of financial uncertainty.
• The fluctuations in the SMI and STOXX 50 during autumn 2023 were primarily driven by earnings disappointments, rising bond yields, ongoing geopolitical uncertainty, and fears of inflation and interest rate hikes. In the following months, the indexes rebounded due to easing inflation, positive economic indicators, investor optimism, and strong corporate earnings.
• The stability in the art index might also be due to the nature of art investments, where valuations are less frequently market to market compared to the real-time pricing of stocks

In conclusion, art overperformed slightly compared to the SMI, and offered greater stability and lower volatility, making it an attractive option for investors looking to diversify their portfolios and mitigate risk during volatile periods in the financial markets.

Past Results and Market Insights

The art market over the last 12 months has been marked by a blend of stability in some sectors and contraction in others. According to insights from both Maddox and Artemundi, the market initially showed signs of resilience, with significant sales in the first half of the year. However, the latter half of the year saw a more conservative phase, with a noticeable contraction in auction sales and an increase in lot withdrawals. Despite these challenges, established artists like Pablo Picasso, Andy Warhol, and Jean-Michel Basquiat continued to perform well, securing their positions as blue-chip investments. The market's cautious approach was reflected in the steady performance of 20th-century masters, as these artists' works are seen as safer investments during times of economic uncertainty.

Predictions and Trends for the Upcoming Year

Looking ahead, both Maddox and Artemundi anticipate a continuation of these trends. The recent May 2024 auctions in New York, as well as the June edition of Art Basel, suggest that the market will remain focused on established artists. Art Basel, traditionally a showcase for contemporary art, saw a noticeable increase in the representation of 20th-century masters, indicating a growing fatigue for contemporary works and a shift towards more secure investments.

Maddox notes that while economic volatility may continue to affect the market, art’s role as a stable alternative asset class is likely to attract more investors, particularly those looking for a hedge against inflation. Meanwhile, Artemundi expects that the demand for blue-chip art will remain strong, driven by both institutional and private collectors seeking safe havens for their wealth.

Splint Invest Exits: Art

Marc Chagall - "The Sleep of Love" (1956-1957) 

Albert Willem - "A Difficult Moment During the Driving Test" (2021)

Interview with Maddox Advisory 

Maddox specializes in sourcing and trading contemporary and post-war art, with a particular emphasis on established artists who have consistently demonstrated strong market performance. The company employs a data-driven approach, leveraging deep market insights to identify opportunities that offer strong returns for its clients. Since its foundation, Maddox has developed a robust portfolio that reflects the evolving trends in the art world, notably the growing interest in art as a financial asset. 

Q: What is your track record over the last 12 months with investments in your field?  

Maddox: Over the past 12 months, Maddox has achieved an average gross return of 13.7%, marking our seventh consecutive year of double-digit returns. Since 2016, we have distributed over £13 million in profits to our clients, with more than 2,000 artworks resold on their behalf. Our consistent performance has resulted in a high level of client loyalty, with 77% of our clients choosing to reinvest their profits with Maddox. 

Q: Can you give us an overview of the market trends over the past 12 months? 

Maddox: The past year has seen a notable rise in collectors purchasing art for investment purposes, particularly as a hedge against inflation and economic volatility. This trend has been particularly strong among younger collectors, who are increasingly viewing art as a viable alternative to traditional investments. Additionally, we have observed a growing recognition of art’s value as a store of wealth, as highlighted by the Deloitte Art and Finance Report. This shift is reflected in the increasing participation of institutional buyers and high-net-worth individuals in the art market. 

Q: What is your outlook for the upcoming 12 months and what trends do you foresee? 

Maddox: We expect the art market to continue to attract investors seeking stability in uncertain times. While contemporary art will remain relevant, we anticipate a stronger focus on established artists who have demonstrated long-term value. We also foresee a growing interest in digital art and NFTs, although these markets will likely remain volatile compared to traditional art forms. Overall, we believe that art will continue to solidify its position as a key component of a diversified investment portfolio. 

Interview with Artemundi 

Artemundi was founded in 1989 with the innovative aim of democratizing art investment by eliminating the excessive fees typically associated with traditional art companies and adhering to transparent business practices. The company specializes in art investments, focusing on Impressionist, Modern, Post-War, and late 20th-century historical artworks, deliberately excluding contemporary emerging art for investment purposes due to a belief in the enduring value of established artists. Over the years, Artemundi has managed over a billion dollars in art assets. 

Q: What is your track record over the last 12 months with investments in your field?  

Artemundi: In the last 12 months, Artemundi has delivered an annualized ROI of 15.2%, with a Sharpe Ratio of 4.5, reflecting the low-risk profile of our investments. We currently manage assets worth €60.7 million, and our track record speaks to our ability to consistently deliver strong returns for our investors. Our success is grounded in our deep expertise in the art market and our ability to source artworks below market value, which provides our investors with a built-in margin of safety. 

Q: Can you give us an overview of the market trends over the past 12 months? 

Artemundi: The art market in 2023 was the best-performing luxury asset class, according to the Knight Frank Luxury Investment Index, with a value increase of 11%. However, this performance was primarily driven by the first half of the year. Since July 2023, the market has entered a more conservative phase, with a noticeable contraction in sales. The global economic situation, including rising inflation and political uncertainty, has led to this cautious approach. Despite this, 20th-century masters have remained stable, while the ultra-contemporary sector has seen the most significant contraction. 

Q: What is your outlook for the upcoming 12 months and what trends do you foresee? 

Artemundi: We expect the art market to continue its focus on stability, with 20th-century masters likely to remain in high demand. The market’s current contraction may persist, particularly in the ultra-contemporary sector. However, we believe that the enduring appeal of established artists will continue to attract both private and institutional investors. As we move forward, we anticipate that art will increasingly be recognized not just for its cultural value, but as a critical component of a diversified investment strategy, offering both financial returns and a hedge against broader market risks. 

Cars as Investment and Our Expert 

Investing in classic cars has increasingly become a popular alternative asset class for collectors and investors alike. Classic cars, particularly those from iconic brands and limited production runs, are not just pieces of automotive history; they are also valuable assets that appreciate over time, often outperforming traditional financial markets. TheCarCrowd, a pioneering platform in this space, has established itself as a leader in classic car investment, offering investors access to high-quality vehicles with strong appreciation potential. 

Led by CEO and Founder David Spickett, TheCarCrowd combines decades of financial services expertise with a deep passion for classic cars. The company employs a data-driven approach to curate a portfolio of assets that have shown consistent growth, leveraging over 60 years of combined experience in both finance and automotive curation. This blend of expertise allows TheCarCrowd to identify vehicles that are likely to appreciate in value, making it a trusted partner for platforms like Splint Invest. 

Car Monthly Performance Analysis 

Over the 12-month period from July 2023 to June 2024, the performance of cars offered on Splint Invest have shown a consistent upward trajectory, outperforming both the SMI and STOXX 50 indices. 

Comparative Analysis and Possible Explanations 

The consistent growth of the car's index relative to the SMI and STOXX 50 can be attributed to several factors: 

• Stable Demand for Modern Classics: The cars included in the index likely benefited from stable demand for modern classics, particularly those that appeal to younger generations of collectors. As noted by TheCarCrowd, the transition in market dynamics towards vehicles from the 1990s onwards has helped sustain demand and support prices, even as older classics see softer performance.
• Low Correlation with Traditional Markets: The cars index's performance underscores the low correlation between collectible cars and traditional financial markets, such as the SMI and STOXX 50. This characteristic makes cars an attractive diversification option for investors, particularly in times of broader market volatility.
• Auction Results and Market Sentiment: Strong auction results, particularly for high-profile sales, have likely boosted investor sentiment in the classic car market. These results reinforce the perception of cars as a reliable store of value, particularly in comparison to more volatile equities markets. 

Overall, the cars index has demonstrated resilience and growth over the past year, significantly outperforming both the SMI and STOXX 50. This performance highlights the potential of cars as an alternative investment category, particularly for investors looking to diversify their portfolios away from traditional asset classes. 

Past Results and Market Insights 

The classic car market experienced a significant boom post-COVID-19, driven by increased demand from collectors and investors looking for stable, alternative investments. However, over the past 12 months, the market has shown signs of softening as it seeks equilibrium after the dramatic rally from 2020 to mid-2022. According to Hagerty, a leading authority on classic cars, the market is currently stabilizing, with many older classic cars, particularly those built before the 1980s, seeing reduced demand as their primary buyer demographic, Baby Boomers, age out of the market. 

Despite these broader market trends, TheCarCrowd’s portfolio has remained resilient. By focusing on modern classics—vehicles built post-1990 that appeal to Gen X and Gen Z collectors—TheCarCrowd has been able to mitigate the impact of the market downturn. The Hagerty Redwood Index, which tracks cars from the 1990s, has shown stable and steady growth, underscoring the health of this segment of the market. 

TheCarCrowd's approach has yielded impressive results, with a compound annual growth rate (CAGR) of 15.73% and a strong ROI across its portfolio. This success is attributed to the company’s rigorous selection process, which is informed by a proprietary algorithm analyzing over a million data points from auction houses, dealerships, and online sales platforms. 

Predictions and Trends for the Upcoming Year 

Looking ahead, TheCarCrowd is optimistic about the future of classic car investments. The global economic climate, with cooling inflation and potentially stabilizing interest rates, is likely to drive renewed interest in classic cars as a store of value. Modern classics, in particular, are expected to continue their upward trajectory, driven by increasing demand from younger generations entering the classic car market. 

TheCarCrowd anticipates growth in the value of modern classics like the Mercedes-Benz McLaren SLR, Ferrari F40, and Maserati MC12, which have recently exceeded auction expectations. As more investors and collectors recognize the potential of these vehicles, TheCarCrowd is well-positioned to capitalize on the shifting market dynamics. 

Interview with TheCarCrowd 

TheCarCrowd, founded by David Spickett, is the world’s first dedicated investment platform for collectible cars. The company enables investors to include collectible cars in their investment portfolios, offering a resilient asset class with strong returns and low correlation to traditional indices. TheCarCrowd's approach is rooted in a data-driven methodology developed over 35 years of car collecting experience. Since its inception, the platform has built a portfolio of over 80 assets, including investments for both TheCarCrowd investors and partners, totaling over £2 million in assets under management. 

TheCarCrowd is the world’s first dedicated investment platform for collectible cars. We enable investors to include collectible cars in their investment portfolios, unlocking a strong-returning, resilient asset class with low correlation to traditional indices. Since our inception, we have built a portfolio of over 80 assets, including investments for TheCarCrowd investors and partners, totaling over £2 million in assets under management. 

Q: What is your track record over the last 12 months with investments in your field?  

TheCarCrowd: Over the past 12 months, TheCarCrowd has grown significantly, with over 80 assets under management, 34 of which are investment vehicles for our investors and partners. These assets total more than £2 million, and we have delivered a compound annual growth rate (CAGR) of 15.73%. Our current ROI across all assets stands at 12.84%, demonstrating our ability to source vehicles below market value and generate immediate returns for our investors. 

Q: Can you give us an overview of the market trends over the past 12 months? 

TheCarCrowd: The last 12 months have seen a softening in the classic car market, particularly for vehicles built before the 1980s. However, our investment vehicles, primarily modern classics from the 1990s onwards, have been less affected by this trend. The growing interest from Gen X and Gen Z collectors, as highlighted by Hagerty, has helped maintain strong demand for these vehicles, supporting their values even in a softer market. 

Q: What is your outlook for the upcoming 12 months and what trends do you foresee? 

TheCarCrowd: We are optimistic about the future of classic car investments, particularly as the global economic climate stabilizes. We expect continued growth in the modern classics segment, driven by increasing demand from younger generations. Vehicles like the Mercedes-Benz McLaren SLR, Ferrari F40, and Maserati MC12 are likely to see significant appreciation as they become cross-generational icons. As interest rates stabilize or potentially fall, we anticipate a renewed interest in classic cars as a store of value, further supporting this market segment.
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Thank you for your attention and time! This blog ended to be longer than usual, but we wanted to provide you all the exciting insights we learnt from our amazing experts. Let us know if you want more long pieces like this.