The Value of Rare: Behavioral and Financial Profiling of Collectible Assets Through an Investor-Centric Classification of Art, Wine, and Watches
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- This thesis investigates the financial performance, risk characteristics, and investor suitability of alternative collectible assets, namely fine art, wine, and luxury watches, compared to traditional asset classes such as equities, gold, and bonds. Using quarterly data from Q1 2017 to Q2 2025 (and from Q3 2008 to Q2 2025 for robustness check), the study evaluates key performance metrics, including annualised compounded log returns, volatility, Sharpe ratios, maximum drawdowns, skewness, kurtosis, and cross-asset correlations. Results show that, over the long term, traditional assets generally outperform collectibles in both returns and risk-adjusted performance, though collectibles demonstrate low correlations with traditional markets, suggesting diversification potential. Gold and, more recently, luxury watches stand out for combining moderate volatility with competitive Sharpe ratios, while art and wine underperform financially but may offer non-financial value to knowledgeable investors. To bridge the gap between behavioural finance theory and empirical performance data, the research also develops an Investor Behavioural Type Matrix and Asset Choice Matrix. The resulting framework provides guidance for aligning collectible investments with investor typologies, accounting for both financial metrics and behavioural biases. Findings reinforce that collectibles should not form the core of a portfolio but can enhance diversification for investors whose preferences, risk tolerance, and market knowledge align with the specific characteristics of these assets. This integrated approach offers both academics and practitioners a practical tool for combining behavioural profiling with asset selection in the context of alternative investments.