Bloomsbury Financial Planning

PLUNGING stock markets have pushed many investors into alternative assets such as collectable items they hope will hold their value, but are they really recession-busters?

The Royal Institution of Chartered Surveyors’ recent Art and Antiques Survey showed a decline in low to mid-range art and antiques in the third quarter of this year, although the super-rich continue to pay for high-end contemporary and rare pieces.

The problem for investors seeking safety in collectables is that, unless they have some degree of expertise, they may be vulnerable to fads, fakes and fraudsters.

For instance, Mike Hall, chief executive of stamp dealer Stanley Gibbons, said that during the boom years of 1975-80 “a lot of lower quality stamps were mis-sold by unscrupulous dealers and their value subsequently collapsed”.

Remember that, unlike investments, there is no Financial Services Authority through which to seek redress. Those who take time to look into their markets can do well, though, on everything from books, wine and stamps to jewellery and photography

ART

Rics spokesman Andrew Davies of AXA art insurance says: “There is an urban myth that fine art and antiques are recession-proof. This is wrong. This market lags behind the economic cycle by around a year to 18 months. So people should not rely on it.

“The bottom end of the market is dead. I went to an contemporary art auction last week where there were 283 lots and only 82 lots sold. That is appalling. Those that did not sell were in the £1,000 to £5,000 range."

Jason Butler, a partner at advisers Bloomsbury Wealth Management, is also sceptical, pointing to the knowledge you must attain or pay for to participate in the art market.

He said: “These assets are illiquid and there is no mechanism for providing a return, unlike the yield with bonds and dividends from equities. You may buy at the wrong time and have to wait years to make a gain.”

BOOKS

“Many are looking for the next JK Rowling with potential for growth in value in the future,” said Robert Harkins of bookseller Anderida Books (anderidabooks.co.uk).

An author’s signature can make all the difference. Harkins said: “JK Rowling signed only 1,700 copies of The Deathly Hallows. First editions of that are worth only the cover price but with a signature they go for upwards of £1,000. For most other authors it does not attract a great deal of value.”

WINE

Fine wines have the advantage of enabling investors to drown their sorrows should prices prove disappointing.

Joss Fowler at wine merchant Berry Bros & Rudd said: “The past 50 years have seen the price for the top 20

Bordeaux

chateaux rising around 10%-15% a year.” If you are thinking of collecting wine, Fowler said: “Stick to

Bordeaux

, the top 20-30 chateaux and the best vintages at current prices.” Wine has to be stored in the right conditions to preserve its value.

STAMPS

It is hard to scoff at some of the gains to be made from stamp collecting. There are various stamp stock indexes, of which the GB 30 Rarities is the most prominent. Hall at Stanley Gibbons said: “It rose by 38.6% in the past year and that was during a period when other asset prices, such as houses, were collapsing.”

He added: “I have made a study of stamp prices going back 50 years and rare stamps in good condition have not gone down in price over that time.”

JEWELLERY

Diamonds may be an investor’s best friend — as well as a girl’s — according to dealers who have seen rare vintage jewels surge in popularity.

Keith Penton, head of jewellery for auctioneer Christie’s in

London

, said “quality, great design and workmanship” are key elements in value and a good place to start would be with “a classic piece such as an art deco diamond bracelet or diamond ear studs, which surpass the rise and fall of fashion trends”. A sale last Tuesday at

South Kensington

saw lots selling from £500 to £30,000, including a Fabergé brooch for £3,800, Penton said.

GOLD, SILVER AND PLATINUM JEWELLERY

The Rics survey showed jewellery in general being only second after contemporary art in terms of demand although, as with other categories, there is greater strength at the top end of the market.

Precious metals such as gold, silver and platinum have risen in price, in part because they are as a classic hedge against economic ills.

Jewellery using these metals has risen with that sentiment but collectors tend to go for vintage or antique pieces up to the art nouveau and art deco periods. Classic pieces from the 1930s with the signature of Tiffany, Cartier or Van Cleef & Arpels are reckoned never to drop in value.

PHOTOGRAPHY

Photographic prints have been rising against other collectable assets for some time. Francis Hodgson, head of photography at auctioneer Sotheby’s, said our familiarity with the medium is part of its appeal.

“With ceramics, for instance, you will have to have a certain expertise. Any one of us can appreciate a photograph,” he said. Of the market in general, Hodgson said: “If you look at prices over many years they have held their value spectacularly well.”

Evidence of this was shown in a sale at Sotheby’s in May. An album by Felice Beato of 75 photos of the aftermath of the Indian Mutiny of 1857 went for £96,500. It fetched £60,300 in 2000.