February 1, 2023.
Investors who solely focus on a traditional portfolio of equities and bonds may be failing to realize that their passion for art, wine, jewelry or other collectibles could be factored into their overall wealth-management strategy.
Collectibles fall under the category of tangible assets along with precious and base metals, energy, infrastructure and real estate, and exist outside of an account balance or financial statement. They are considered an alternative investment, or a group of assets that do not fall into conventional investment categories. Put another way, alternative investments are not the usual suspects — stocks, bonds, mutual funds and cash.
Alternative asset classes can be important in a wealth-management strategy because they can have little correlation with the stock and bond markets. Some are even countercyclical and could reduce your exposure to overall market risk in a way that traditional strategies cannot.