High net worth individuals are reacting to
the uncertainty in global financial markets by investing in
art and other tangible assets, a trend which is causing
valuations to climb in the insurance sector, according to
Susan Ellis, a wealth investment and protection analyst with
business information provider
Datamonitor.
A number of factors combined to make 2008 a disastrous year for
the world’s wealthy: stock markets experienced unprecedented
falls, as did hedge funds and other supposedly uncorrelated
investments, and several elaborate frauds were uncovered, which
wiped millions from the assets of high net worth individuals.
An ongoing lack of confidence in financial markets, and arguably
the wealth management industry – which could be perceived as
having failed to deliver the service and security that clients
pay for – has left investors searching for safer investment
options. But options such as cash and government bonds are simply
not that attractive in terms of returns; moreover, for some,
these ‘safe haven’ investments are not safe enough amid lingering
fears over the safety of banks and spiralling government debt.
This lack of confidence is driving investment in tangible assets
such as art, gold bullion, jewellery, antiques and collectable
cars, as are the bargain prices attached to some of these
investment ideas: as Ms Ellis notes, the fine art market has
declined 35 per cent this year.
But the investment appeal of collectables is not solely based on
their tangibility – although it is easy to see why HNW
individuals may be drawn to an asset they can see over an opaque
investment vehicle – but also the pleasure that such objects can
give in addition to being a means of storing wealth.
