Sports Collectibles Are, and Have Long Been, a Resilient Asset Class

Amidst widespread market volatility, many investors are looking for ways to preserve and, of course, grow their wealth. With recent swift declines in the equity and crypto markets, investors are sharpening their pencils and taking a harder look at what they own and how their investments are allocated.

Here’s some good news: sports collectibles, and collectibles more broadly, have seen this playbook before. Reassuring to many collectors, the collectibles market has demonstrated resilience during periods of economic stress and macro uncertainty, delivering much needed diversification, returns, safe haven status, and some joy along the way.

The PWCC500, an index that tracks the investment performance of 500 of the highest market value PSA graded sports cards, offers some compelling data below:

In his March 2020 column “Taking My Hacks: The Hobby and COVID-19”, my good friend and former PSA CEO Joe Orlando penned:

“After 9/11, the hobby survived. After the financial crisis of 2008, the hobby survived. In fact, one could argue that the hobby thrived during those times, at least in relation to other markets.”

Importantly, the above was written before having the benefit of hindsight of how the hobby exploded in the wake of COVID-19. 

In a recent Barron’s interview, wealth management advisor and sports memorabilia expert Howard Epstein also points out:  “While few investments are recession-proof, the memorabilia assets class holds its value quite well in down economic cycles and tends to be among the first to recover.”

And this isn’t just a case of recency bias, following a surge of interest and performance in the sports collectibles category that has witnessed the PWCC500 outperform the S&P500 by 504% since 2008.*(PWCC)

Let’s take a trip down memory lane to 2010, when financial markets were also in flux.

A 2010 Wall Street Journal article noted that, when times get tough, high net worth individuals increased allocations to tangible assets like collectibles as a means to diversify a traditional portfolio:

“The Capgemini and Merrill Lynch World Wealth Report 2010 found that – with financial markets still in flux – high-net-worth individuals are returning to passion investment, which respondents to the survey indicated that they were approaching as “investorcollectors”, seeking out those items that are perceived to have tangible long-term value.”

Said Rupert Robinson, chief executive of London-based Schroders Private Bank, at the time: “Not only are [blue chip collectibles] tangible investments and an inflation hedge, but they can diversify exposure away from the movements in traditional fixed income and equities.”

Collectable loyalists may be sick of hearing me say that sports collectibles are at the intersection of passion and profits, but it’s true. In fact, in a Wealth Report Attitudes Survey 2018 from Knight Frank, “joy of ownership” slotted in as the No.1 motivation for collectors, outranking capital appreciation, safe financial haven, portfolio diversification and social status.

These unique and intoxicating qualities have led some advisors to suggest that collectibles could make up between 10-20% of one’s portfolio, depending on your personal risk-tolerance and financial goals.  

It is important to note that past performance is no guarantee of future performance. It’s also fair to project an increase in correlation to broader markets for collectibles as liquidity and mainstream participation continue to unfold through fractionalization; however, as we look out into potential choppy waters in the equity markets, we are invigorated by the opportunity to increase education and awareness around the role collectibles can have in your portfolio – just as it has for decades for other “investorcollectors”. 

At Collectable, we are committed to doubling down on education and content to help bring you up to speed, and to build additional structures for you to gain exposure. We are always here to help with any questions or concerns.