Jettison the Jackson Pollocks, chuck out the Château Latour and find more space in your collection of high-value, high-status items for Chanel handbags and Rolex watches.
That is the basic message of Credit Suisse, the Swiss bank, which has studied collectibles to see which appreciate most in times of high inflation.
“We find that Chanel handbags, traditional Chinese works of art and wristwatches offer the best inflation protection, while fine wines, modern and contemporary art, and American and Latin American art tend to suffer in high- inflation regimes,” it said in a report.
Chanel bags, preferably designed by Karl Lagerfeld, rise in value by 7 per cent in normal times, it said, and by 17 per cent in high-inflation years. Rolex watches have also done well, up by 6 per cent in normal years and by 8 per cent in high-inflation years.
Fine wines typically fall by as much as 11 per cent in high-inflation years, says the bank, whose research was carried out with Deloitte.
American art, Old Masters and classic cars have also done relatively badly in inflationary times, they say.
Nanette Hechler-Fayd’herbe, the chief investment officer for Credit Suisse in Europe, also had a warning for collectors of fine wine: a fifth of bottles that are purported to be from the most renowned châteaux are thought to be counterfeit.
She added that the findings should be taken with a pinch of sal tas they are based on collectibles indices compiled in different ways, some of them of short duration. The handbags index only goes back 14 years.
Non-fungible tokens, another collectible category to emerge in recent years, have a much shorter tracker record still.
Most indices of collectibles also seriously exaggerate true returns because they take no account of auction costs, insurance, storage and authenticity: 20 per cent of wine purporting to be from the most famous chateaux is estimated to be counterfeit, the report says. They also reflect tastes of the day: no one wants to talk about losses incurred by collectors of once-prized assets like mahogany furniture and some postage stamps
Credit Suisse said that the lockdown period of 2021 was a remarkably strong time for the value of many collectibles and the start of 2022 had been good too. However with inflation elevated, especially in the US and UK, and interest rates set to rise, it now expected returns to falter.
Hechler-Fayd’herbe said that while many of Credit Suisse’s wealthy clients amassed collectibles primarily because they had an interest or passion in them, they also expected to make a financial return from them – on paper at least.
The end of an era of ultra-low interest rates is expected to put downward pressure on collectible values as it exposes their great flaw – unlike shares and deposit accounts they generate no income.