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The decorative art and antiques market has long provided a pleasurable way for many investors to enjoy a piece of history in their home whilst helping to protect wealth and even make a good return in the medium term. It has also provided the pure investor seeking diversification, a proven and safe place for part of their investment portfolio, to help combat against financial market volatility and the threat posed from inflation.
The ability to do this relies on two critical factors.
First is knowledge of the market. Accurate, up-to-date and most important of all, experienced knowledge. This includes special attention to provenance, historical value, rarity, intrinsic desirability and the aesthetic appeal of every item under consideration.
Second is the ability to monitor trends in the market over an appropriate timescale and to know when best to enter the market. This requires expertise built up from a lifelong professional participation in these assets with a keen eye to track the movement of quality items and the interest generated from buyers and sellers.
Our own data analysis includes two studies designed to extract the Best-in-Class category from the whole market of Decorative Art & Antiques, whilst ensuring a suitably varied portfolio. Firstly, the green bar chart on the left shows the confidence in the market when items in our category are bought at auction. It shows the over-performance of prices paid at auction relative to "fair price". Secondly, the red bar chart on the right shows the actual returns from repeat sales recorded in the John Bly Antiques sales book. Both are showing periods 2001 through to mid 2010.
 
(CLICK HERE TO JUMP TO PRODUCT EXAMPLES BELOW)
Also, we invite you to review a detailed study on this asset class with our special report "THE DAI GUIDE TO BUYING AND INVESTING IN DECORATIVE ART & ANTIQUES". This is available from our contacts page. Please CLICK HERE.
Looking at the market in greater detail
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The graph left shows the actual indices of the FTSE100 equities market (year end), and the Antique Collectors Club Index, which started in 1968 at 100, and is based on retail prices assessed from shop, fair, market and auction prices of a selection of typical rather than exceptional items, from thousands of items in the British Antique Furniture Book.
This does not ideally reflect the "best-in-Class" market, where there has been continued demand and strong growth.
What can be determined from the graph is that even though middle market items have a lacklustre performance they are considerably less volatile than equities. For performance with "best-of-breed" items, see below. |
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The graph left shows the annual percentage change on each of these markets. Of course the monthly, weekly and daily movements of the FTSE100 are not captured, but this does illustrate a comparison against long term equity investment strategies. (Of course there is no income from Decorative Arts & Antiques, but we are not suggesting they compete with equities for total return). What they do offer is a great diversification opportunity to hedge against volatility with other markets in the short to medium term. |
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When considering how one particular market might move as compared to a second market, a calculation to find the correlation coefficient is often used (see note in FAQ's).
In the graph left showing a rolling monthly correlation of 5 year periods between 84-88 inclusive through to 03-07 inclusive for the FTSE100 & ACC indices, there is a stronger positive correlation in an equities bull market - which shows that Decorative Art & Antiques do not loose out on good times, and a stronger negative correlation in an equities bear market - which shows how Decorative Art & Antiques might perform well when equity markets are under performing. |
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The chart shown left uses yearly figures for the FTSE100 and ACC indices to show correlation for rolling 10 year periods (as opposed to 5 year periods).
The same conclusions can be drawn from this calculation as the 5 year rolling study shown above. |
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The graph shown left is the ACC compared to the UK Retail Price Index since its records began in 1987, both re based to 100 in 1987.
See correlation chart below. |
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The graph shown left is the ACC compared to the US 10 year treasury bill returns yearly averaged rate from 1987 to 2010, both re based to 100 in 1987.
See correlation below. |
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This chart shown left is the correlation between the ACC and the 3 indicators discussed above. They are based on yearly average figures.
As before, please see note in FAQ's for further information on correlation. |
In summary, many middle market items are now the same or less than buying new reproduction furniture, which means their prices are less than their utility cost. Of course Best-in-Class items are performing as strongly as ever and continue to demonstrate good returns.
EXAMPLES OF "BEST-OF-BREED" ITEMS AND THEIR PERFORMANCE IN PREVIOUS 10 YEARS
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1) A set of eight Regency period mahogany dining chairs (1 shown). |
2) An early 19th century mahogany three pedestal dining table with, importantly, its original leaves - retaining a fine colour. |
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2001 - £25,000 |
2009 - £55,000 |
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2001 - £65,000 |
2009 - £120,000 |
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10.4 % annual |
7.9 % annual |
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3) A pair of French open armchairs c.1740 (1 shown), made notable by the stamp of the maker - 'Normand'. |
4) A superb example of Sheraton period furniture in the form of a lady's writing desk with detachable book carrier, c.1795. |
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2004 - £12,000 |
2009 - £20,000 |
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1998 - £22,000 |
2004 - £36,000 |
2008 - £45,000 |
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10.8 % annual |
7.4 % annual |
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| 5) A fine mid-19th century mahogany serving table with quality and decorative motifs attributable to leading designers of the 1850's. |
From the John Bly Day Book, entry dated 1961.
A selection of items from the daybook above sold for £384.8.0 (Pounds, Shillings & Pence). |
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2005 - £7,000 |
2009 - £15,000 |
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1981 - £5,445 |
2001 - £42,835 |
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20.9% annual |
12.2% annual |
THIS PAGE IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL ADVICE OR AN OFFER FOR INVESTMENT IN ANY FINANCIAL INSTRUMENT. REVIEW FROM YOUR FINANCIAL ADVISOR IS ESSENTIAL IN ORDER TO INDEPENDENTLY ASSESS SUITABILITY FOR INVESTMENT IN ANTIQUES & DECORATIVE ARTS.
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