BRICKS and mortar, shares and bonds are often portrayed as safe assets with healthy returns over the longer term.
BRICKS and mortar, shares and bonds are often portrayed as safe assets with healthy returns over the longer term. Indulging in passions such as wine, coin or stamp collecting, on the other hand, is seen as risky business that’s best dabbled on a smaller scale.
Yet the reality is, in fact, far removed from this widely held perception.
Research compiled by Access Economics indicates that inves-ting in Australian banknotes, stamps, coins and thoroughbreds is anything but risky, or for that matter less financially rewarding than property or shares.
An index of Australian collectibles including taxi plates, thoroughbreds, wine, speciality stamps, coins, banknotes and art shows that the top performing collectibles, and indeed the top performers among all asset classes over a 10-year period, have been banknotes and wine.
Australian banknotes have increased in value by close to 500 per cent in the past decade, and about 25 per cent during 2001.
The research found that Australian wine was the second highest performer with a rise of about 300 per cent during the past decade.
Access Economics economist Anthony Baker said that, despite the popularity of property and shares, the former was not particularly “crash hot” over the long term.
“Wine is really the one that has shone. It has been an out-standing performer,” he said.
“Banknotes have been top of the class but wine has been kick-ing at the heels over the past two years.”
The Access Economic report, released in September last year, reflected the uncertain economic condition experienced during 2001-02, yet Mr Baker said collectibles provided some of the least risky investments despite the high returns.
“They are high-return investments but not so much high risk,” he said. “There is a correlation between risk and return but if you add scarcity, the level of risk goes down.
“It varies from asset class to asset class. Some require specialists’ skills where it is just investors, whereas with other asset classes others are able to have a go.”
Global shares have proven the worst performers, but Australia’s resilient economy generated asset price pressures in some markets.
Global shares have dropped from the third best performer to the 12th when compared with the previous survey completed in 2001. Australian bonds have been healthy performers with inflation effectively curbed.
Global shares were the worst performing assets class during the first half of 2002, while Australian bank-notes were the best.
“This makes a welcome change from the last four surveys, where taxi plates took the booby prize,” the report says.
“A lethal cocktail of deregulation and GST administration costs took their toll on plate prices.”
Yet while over the decade collectibles have more than held their own, the report says individual assets could be prone to volatility in the short term.
Volatility is removed as the market for individual collectibles increased.
“In the case of taxi plates, periodic understatement of sale prices to minimise stamp duty may also affect the data,” the report says.
The wine index that measures the change in price of 84 premium wines using a 1971 Grange as a benchmark also provides an insight into the sector.
“The tailing off on the index in 2002 provides food for thought for wine investors and may be the first signs of both a rising Australian dollar and an oversupply of premium grapes starting to affect prices,” the report says.
Mr Baker said some people had talked about premium wines going off the boil, which possibly reflected an oversupply of product.
Art, on the other hand, boomed in the late 1980s then collapsed, and has performed at below inflation rates during the first half of 2002.
