Splint Invest Risk Rating System: How We Assess Investment Quality
🔹 Splint Invest Risk Rating System: How We Assess Investment Quality
To empower investors with clear and reliable decision-making tools, Splint Invest has developed a robust Risk Rating System that evaluates every alternative asset listed on the platform. Our goal is simple: provide transparency, comparability, and confidence when assessing the risk-return potential of investments in wine, art, watches, trading cards, and beyond.
This model gives you the ability to understand how risky — or resilient — an asset really is. Whether you're just starting out or looking to fine-tune your portfolio, this guide will walk you through how our scoring works and what it means for your investments.
🔍 The 5 Core Risk Metrics
Each asset is evaluated across five equally weighted metrics (20% each), forming a comprehensive risk profile:
- Standard Deviation (Volatility)
How much does an asset’s price typically fluctuate? This metric tells us about price stability — or lack thereof.
- Low standard deviation: Stable returns (e.g. blue-chip art).
- High standard deviation: Greater uncertainty (e.g. emerging artists or volatile collectibles).
- Value-at-Risk (VaR)
VaR estimates the worst-case expected loss over a five-year period with 95% confidence.
- Low VaR: Downside is well protected.
- High VaR: Potential for steep value drops, albeit with higher upside.
- Sharpe Ratio
Measures how well the asset compensates you for its risk.
- High Sharpe Ratio: Strong reward relative to risk.
- Low Sharpe Ratio: Returns may not justify volatility.
- Track Record
Based on historical sales and comparable performance:
- Multiple exits?
- Strong average return?
- High auction sell-through rates?
- Open Offerings (Market Saturation)
Indicates scarcity or saturation in the current market.
- Fewer offerings: Higher resale potential.
- More offerings: Price pressure likely.
✅ Scoring System: How We Grade
| Grade | Score |
|---|---|
| A | 10 |
| B | 8 |
| C | 6 |
| D | 4 |
The final risk grade is a simple average of the five metric scores. Here's how we interpret the score bands:
| Final Score Band | Rating |
|---|---|
| 9.0 – 10.0 | A – Low Risk |
| 7.5 – 8.9 | B – Moderate Risk |
| 6.0 – 7.4 | C – Elevated Risk |
| Below 6.0 | D – High Risk (Excluded) |
Assets rated "D" are generally excluded unless specifically approved by our investment committee. A single "D" in one metric may be allowed in exceptional cases, such as an emerging asset with limited track record.
📈 Interpreting the Ratings with Real-World Examples
🔹 Score A: Low-Risk, Institutional-Grade Assets
Example: Original painting by Pablo Picasso
- Consistent price growth
- Low volatility
- Strong global demand and auction history
- Scarcity and brand recognition
Investor Profile: Long-term, risk-averse investors seeking capital preservation and steady appreciation
🔹 Score B: Balanced Opportunity/Risk
Example: 1-of-1 Luka Dončić National Treasures Rookie Card
- Medium volatility tied to athlete performance
- Strong demand, some market fluctuation
- Good sales record and appreciation
Investor Profile: Investors seeking upside with controlled risk
🔹 Score C: High-Risk, High-Reward Potential
Example: Emerging artist with 2–3 gallery shows
- High volatility and limited history
- High potential for gains or losses
Investor Profile: Risk-tolerant investors aiming for alpha and early access
🔹 Score D: Not Suitable for Release
Example: Generic artwork with no exhibitions or sales
- Uncertain pricing
- No resale market
- Oversupply with low exit likelihood
Investor Profile: None — filtered out by our risk team
🧠 Conclusion: A Smarter Way to Invest
At Splint Invest, we’re not just building access — we’re building confidence. With our new Risk Rating System, you can evaluate every asset with clarity and context, comparing opportunities across categories and investment styles.
Whether you prefer stability or high upside, our model ensures you always know the risk side of the equation — not just the return story.
In the coming weeks, this risk rating will be added to all new offerings and select past releases in the Splint Invest app.
Have questions or suggestions? We’d love to hear from you!
